Procter & Gamble Set to Report Promising Q1 2025 Results

Procter & Gamble (NYSE: PG) will share its fiscal Q1 2025 results on Friday, October 18. Analysts expect a strong performance, predicting revenue of $22.1 billion and earnings of $1.92 per share. These numbers exceed consensus estimates of $21.96 billion in revenue and $1.90 in earnings per share. While low single-digit growth is anticipated for overall sales, a mid-single-digit increase in earnings per share is expected, largely affected by restructuring costs. For a deeper dive, our interactive dashboard analysis on Procter & Gamble’s FY 2025Q1 Earnings Preview provides further insights into revenue and earnings trends for the quarter.

Key Trends Influencing P&G’s Q1 Performance

Slight sales growth is anticipated, supported by modest increases in volume. The grooming segment has performed particularly well recently, a trend that is expected to continue in Q1. Pricing for grooming products is also likely to rise, although sales in the Baby Care division may decline due to ongoing market share losses.

P&G is currently restructuring its market portfolio, which is set to influence overall profit margins. The company expects to incur a charge of $750 million related to currency translation losses in Q1. Nonetheless, core earnings per share are projected to increase more rapidly than sales, thanks to a decrease in outstanding shares. P&G aims to invest between $6 billion and $7 billion in share repurchases throughout fiscal 2025.

A Look Back: P&G’s Q4 Performance

In Q4 2024, Procter & Gamble’s revenues were flat year-over-year at $20.5 billion, as a 1% increase in pricing and a 1% rise in volume were counteracted by a 2% negative impact from foreign exchange rate fluctuations. By segment, Grooming experienced a strong 7% organic sales growth, while Health Care, Beauty, and Fabric & Home Care segments saw gains of 4%, 3%, and 2%, respectively. However, Baby, Feminine & Family Care faced a 1% organic sales decline. Margin performance showed a 100 basis point decrease in core operating margin, which fell to 19.3% in Q4, attributed mainly to currency translation charges and higher selling, general, and administrative expenses. Despite the revenue plateau and eroding margins, P&G reported a slight increase in earnings, rising to $1.40 from $1.37 in the same quarter last year due to a reduction in total shares outstanding.

Implications for P&G Stock

P&G shares have appreciated by 20% year-to-date, nearly in line with the S&P 500 index. Over recent years, PG stock has exhibited significantly lower volatility compared to the S&P 500. The Trefis High Quality (HQ) Portfolio, which comprises 30 carefully selected stocks, has also been less volatile, yet has consistently outperformed the S&P 500. This trend indicates that HQ Portfolio stocks typically yield better returns with reduced risk over time, demonstrating a steadier performance pace.

Currently, we assess Procter & Gamble’s Valuation at approximately $170 per share, closely aligned with its market price. Our valuation framework relies on a 24x price-to-earnings (P/E) multiple for PG, based on an expected earnings figure of $7.00 per share on an adjusted basis for fiscal 2025. This 24x P/E figure aligns with P&G’s average multiple over the last four years.

While PG stock appears fairly valued, analyzing how Procter & Gamble’s Peers perform on key metrics provides additional context. More useful comparisons across various industries can be found at Peer Comparisons.

[1] Returns as of 10/15/2024
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.