Procter & Gamble: A Consumer Staples Titan Built to Win

Key Points

• Proctor & Gamble returned to growth in FQ2 2025 after posting back-to-back negative growth quarters.
• Organic growth improved across the board with the only exception being in China, which saw a 3% YoY drop but still better than the 16% YoY drop in FQ1 2025.
• Consumers are willing to spend a little more on brand names over private labels again.

Global consumer products manufacturer Proctor & Gamble Co. NYSE: PG posted upbeat earnings in its fourth quarter of 2024. 

The consumer staples sector leader sells well-known grooming, baby, personal care, and hygiene products under brands like Pampers, Luvs, Bounce, Downy, Gain, Tide, Bounty, Charmin, Always, Tampax, Swiffer, Head & Shoulders, Febreze, and Old Spice. 

It competes for shelf space with the Clorox Co. NYSE: CLX and the Unilever Group NYSE: UN.

Fiscal Q2 2025 Returns to Positive Growth

Proctor & Gamble reported fiscal Q2 2025 EPS of $1.88, beating consensus estimates by 2 cents. After two back-to-back quarters of negative growth, revenue rose 2.1% year-over-year (YoY) to $21.88 billion versus $21.54 billion.

Organic sales rose 2% YoY comprised of:

• Organic sales in the Beauty segment rose 2% YoY.
• In the Grooming segment, organic sales rose by 2% YoY.
• The Healthcare segment's organic sales rose by 3% YoY.
• The Fabric and Home Care segment organic sales rose 3% YoY.
• Organic sales of the Baby, Feminine, and Family Care segment rose 4% YoY.

China organic sales fell by 3% YoY in FQ2, a sequential improvement from the 16% drop experienced in FQ1.

Operating cash flow was $4.8 billion, and net earnings were $4.7 billion for Q4. Adjusted free cash flow productivity was 84%. The company paid out $2.4 billion in dividends and $2.5 billion in share repurchases.

In-Line But Cautious Full Year 2025 Guidance

Proctor & Gamble reaffirmed fiscal full year 2025 EPS of $6.91 to $7.05 versus $6.94 consensus estimates. Full-year revenue is expected to grow 2% to 4% to $85.72 billion to $87.40 billion vs. $85.01 billion consensus estimates. However, management expressed caution due to increasing FX headwinds. After initially expecting $500 million in commodity cost headwinds and FX fluctuations, Proctor & Gamble’s outlook improved to $200 million in commodity costs while FX remained neutral. However, the initial outlook was again revisited with a forecast of $500 million in full-year headwinds, which would shave EPS by 20 cents.

The Consumer Is Spending a Little More for Brand Names Again

The company noted that the consumer is not only stable, but private label shares continue to flatline or decline in the United States and Europe, illustrating the consumers' capacity to spend slightly more on name brands.

Proctor & Gamble CEO Jon Moeller commented, "Our first-half results keep us on track to deliver within our guidance ranges on all key financial metrics for the fiscal year. We remain committed to our integrated growth strategy of a focused product portfolio of daily use categories where performance drives brand choice and superiority — across product performance, packaging, brand communication, retail execution, and consumer and customer value — productivity, constructive disruption, and an agile and accountable organization. This strategy has enabled our solid results and is a foundation for balanced growth and value creation."

PG Stock Is Forming a Cup Pattern

A cup and handle pattern is comprised of two separate patterns: a cup and a handle. The cup is formed as a stock peaks a swing high, marking the lip line as shares fall to a swing low, form a rounding bottom, and rally back to retest the cup lip line. After the cup pattern is complete, the stock rejects again from the lip line to form a shallow pullback before turning back up again to retest the cup lip line, forming the handle. The cup and handle breakout occurs if the stock can break out above the cup lip line on the handle bounce and in the third attempt.

PG formed the cup lip line at $170.76 before sliding to a swing low of $158.28 and forming a rounding bottom, staging a rally back up towards the cup lip line. Shares propelled higher on its earnings reports, but it hasn't been able to complete the cup pattern by retesting the $170.76 lip line. The daily anchored VWAP support is slowly rising at $163.40. The daily RSI is flat at the 51-band. Fibonacci (Fib) pullback support levels are $161.48, $158.28, $155.78, and $152.25.

PG stock’s average consensus price target is 8.76% higher at $180.53, and its highest analyst price target sits at $209.00. It has 15 analysts' Buy ratings and 7 Hold Ratings. The stock has a tiny 0.70% short interest.

Bullish investors can consider using cash-secured puts at the Fib pullback support levels to buy the dip. If assigned the shares, then writing covered calls at upside Fib levels executes a wheel strategy for income in addition to the 2.42% annual dividend yield.