Overview
Procter & Gamble
PG · NYSEQ1 FY2027Consumer Staples · Household & Personal Care
Since the Report − 3.9%
Revenue grew 4.0% year over year, EPS beat the estimate by 6.4%; the stock rose 5.6% in its first reaction.
- RevenueQ1
- $23.28B
- ▲ 4.0% YoY · Beat Estimate by 2.1%
- Core EPS
- $2.00
- Estimate $1.88 · Beat by 6.4%
Verdict
BUYP&G beat first-quarter estimates by 2.1% on revenue and 6.4% on core EPS, with volume up 2.4%. The stock closed up 5.6% because the company held its annual profit guidance despite a bigger commodity hit. The next thing to watch is how far gross margin contracts in the second half.
Close on Report DayOct 22
$165.59▲ 5.6%Report-Day Move
- Market Cap(Today)
- ≈ $369 B
- 1Y Return(At Report)
- + 9%
- P/E(At Today's Price · $6.90 · Trailing 12M)
- 23.1
- PEG(Company Guidance 2027)
- 14.41
- Net Margin(Trailing 12M)
- 18.2%
Earnings Summary
In 30 Seconds- Net sales of $23.28 billion beat the estimate by 2.1%, and core EPS of $2.00 beat by 6.4%.
- Volume supplied 2.4 points of organic growth, but core gross margin fell 1.5 points and the commodity headwind estimate rose.
- The stock closed up 5.6% at $165.59 after the company held its profit guidance.
The Numbers
Organic Sales Growth
4.0%
Volume 2.4% · Price 0.4%
Core Gross Margin
50.0%
▼ 1.5 Points YoY
Free Cash Flow
$4.40B
Productivity 93% · Target 85 – 90%
Stock Reaction
▲ 5.6%
Close-to-Close · Intraday High $166.85
Quarterly Revenue ($ Billion)
22.39
Q1 26 · $22.4 B
22.21
Q2 26 · $22.2 B · QoQ − 0.8%
21.24
Q3 26 · $21.2 B · QoQ − 4.4%
21.20
Q4 26 · $21.2 B · QoQ − 0.2%
23.28
Q1 27 · $23.3 B · QoQ + 9.8% · YoY + 4.0%
- Q1 26
- Q2 26
- Q3 26
- Q4 26
- Q1 27
Q2 FY27 Company Guidance
- All-In Sales Growth2% – 4%2%4%
July 1–3% · Includes ThorneRaised 1.0 Point ▲
- Organic Sales Growth1% – 3%1%3%
Same As July · Q1 4.0%Unchanged
- Core EPS6.89 – 7.11 $6.89 $7.11 $6.89 – 7.11 $
Midpoint 7.00 · Growth 0–3%Unchanged
- FCF Productivity85% – 90%85%90%85% – 90%
Same As July · Q1 93%Unchanged
- Commodity Headwind1.4 billion
After Tax · July ~$1.0BRaised 40% ▼
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±57% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Fabric & Home Care$8.21 BShare 35.5%▲ 4.0% YoY
- Baby, Feminine & Family Care$5.32 BShare 23.0%▲ 3.0% YoY
- Beauty$4.41 BShare 19.1%▲ 6.0% YoY
- Health Care$3.32 BShare 14.3%▲ 3.0% YoY
- Grooming$1.89 BShare 8.2%▲ 4.0% YoY
Key Metrics
Volume Growth
2.4%
Press Release
Core Operating Margin
25.9%
Press Release
Operating Cash Flow
$5.77 B
Press Release
Dividends Paid
$2.60 B
Press Release
Share Repurchases
$1.25 B
Press Release
Shares are computed over the segment total: $23.1 B. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“Our solid sales, earnings and cash results in the first quarter reflect sharpened execution of our integrated strategy. While we expect there will continue to be geopolitical and economic challenges, this strong start keeps us on track to deliver within our guidance ranges for organic sales growth, core EPS growth and free cash flow productivity for the fiscal year. We remain committed to our strategy to delight consumers with superior products at a superior value by putting the consumer first in everything we do. We are confident in the near term and excited about the future.”
- Volume Growth Is Back
- Commodity Costs Rising
- Pricing Through Innovation
Summary and Review
Summary
P&G's net sales for the quarter ended September 30 were $23.28 billion. That is up 4.0% year over year and 2.1% above the market expectation. Core EPS of $2.00 beat the estimate by 6.4%. Core EPS a year earlier was $1.99, so annual profit growth was only 0.5%. Organic growth was 4.0%, and 2.4 points of it came from volume. The revenue and profit gates are open. The guidance gate is in line, because the core EPS range of $6.89-7.11 was kept.
The stock closed at $165.59, up 5.6% on the day. The market did not read this report as a pricing story but as a volume story. In recent years P&G drew most of its growth from price increases. This quarter pricing contributed only 0.4%. The return of volume suggests consumers are staying with the brands. Organic growth in North America was 3%. The intraday high was $166.85, close to the 52-week high.
The score is 72 and the view is buy, but the caveat is clear. Core gross margin fell 1.5 points year over year to 50.0%. The company raised its after-tax commodity headwind estimate from $1.0 billion to $1.4 billion. Holding the profit range anyway shows the productivity program is working. The stock now trades 2.1% above the average analyst target of $162.20. The market has priced in most of the good news. Any further gain likely depends on a margin recovery.
Full Review
Growth is coming from volume again.
Organic sales rose 4.0%. Volume added 2.4 points, mix 1.1 and price 0.4. All five segments grew. Beauty was the fastest: sales of $4.41 billion, up 6%. Its organic growth was 5.4%. The largest segment, Fabric & Home Care, carries 35% of total sales at $8.21 billion. Its organic growth was 4.8%. The slowest segment was Health Care at 2.7% organic growth. The picture shows balanced growth. It does not rely on a single category or a single region. Grooming rose 4% to $1.89 billion. Baby, Feminine & Family Care grew 3% to $5.32 billion. Volume growing faster than price points to market share being held.
Margins are shrinking, cost pressure is rising.
Core gross margin was 50.0%, down 1.5 points year over year. Reported gross margin fell 1.6 points to 49.8%. Core operating margin also slipped 0.8 points to 25.9%. On tariffs, the quarter got a 0.5-point boost to gross margin. The main pressure comes from commodities. The company raised its full-year after-tax commodity headwind from $1.0 billion to $1.4 billion. Including interest, currency and other items, the total headwind reached 79 cents per share. In July it was 56 cents. This drag takes about 11 points off core EPS growth. On the earnings call, management said cost pressure will rise markedly in the second quarter and the second half. That means a tough second half for margins. The profit range held, but its cushion has thinned.
Guidance held, sales target raised with Thorne.
All-in sales growth guidance moved from 1-3% to 2-4%. The reason is the Thorne acquisition, which closed on October 1. Organic sales growth guidance stayed at 1-3%. Core EPS guidance is $6.89-7.11, meaning 0-3% growth. The $7.00 midpoint is 1.6% above the fiscal 2026 actual of $6.89. In the first quarter, core EPS rose only 0.5%. Excluding currency, it was flat. So for the profit range to hold, productivity gains must offset cost increases for the rest of the year. The company expects organic growth of about 3% in the first half. GAAP EPS guidance of 1-5% growth was also kept. That range is measured against last year's reported EPS of $6.62. The core tax rate estimate rose to 20-21%.
Cash is strong, payouts continue.
Operating cash flow was $5.77 billion in the quarter. Free cash flow was $4.40 billion. That means 93% of net earnings turned into cash. The annual target is 85-90%. The company paid $2.60 billion in dividends in the quarter. It also bought back $1.25 billion of stock. The full-year plan is over $10 billion in dividends and about $5 billion in buybacks. Restructuring costs in the quarter were $98 million before tax. The two-year program costs about $2 billion in total, and most of it was booked last fiscal year. The rest falls in this fiscal year. On the earnings call, management said the 15% reduction in non-manufacturing headcount is continuing. Strong cash flow keeps payouts going despite margin pressure.
Watch one line next quarter.
Next quarter, look at one line: core gross margin. This quarter it contracted 1.5 points. If the second-quarter contraction stays below 2 points and organic growth holds above 3%, the midpoint of the profit range is intact. If it exceeds 2 points and the price contribution stays under 1%, the low end becomes the realistic scenario. The volume threshold is clear too. If volume growth stays above 2%, the need for price increases shrinks. If volume drops below 1%, the company may have to lean on pricing again to protect margins. The November 19 investor day will also give the first hint on long-term margin targets. For the general method of reading an earnings day, see the guide.
Looking Ahead
Strengths and Risks
4 Strengths · 4 RisksStrengths
4- Volume supplied 2.4 points of organic growth, while pricing added only 0.4 points.
- All five segments grew year over year.
- Free cash flow productivity of 93% beat the 85-90% annual target.
- Core EPS guidance was held despite a higher cost estimate.
Risks
4- Core gross margin contracted 1.5 points year over year to 50.0%.
- The after-tax commodity headwind estimate rose from $1.0 billion to $1.4 billion.
- Total cost headwinds reached 79 cents per share, trimming about 11 points from profit growth.
- The stock trades 2.5% above the average analyst price target.
What to Watch
3- An investor day will be held on November 19, 2026.
- Thorne began contributing to sales from October 1.
- Second-quarter results are expected in late January 2027.
Upcoming Earnings
To Understand This