Procter & Gamble (NYSE:PG) recently raised its quarterly dividend to $1.0568 per share, an increase from $1.0065. Nevertheless, PG’s stock has lagged behind the broader S&P 500 year-to-date, dropping 5% while the index rose by 7%. This decline can be attributed mainly to the company revising its full fiscal year outlook (ending in June) in response to a slowdown in consumer demand. Despite these obstacles, we see potential for PG stock to appreciate. Although there are minor concerns, its current valuation seems reasonable. Our favorable outlook is based on a thorough assessment of PG’s present valuation versus its recent operational results and its historical and current financial stability.
Our in-depth evaluation of Procter & Gamble, focusing on Growth, Profitability, Financial Stability, and Downturn Resilience, shows that the company maintains solid operational performance and a strong financial position. That being said, if you are looking for growth with less volatility compared to individual stocks, the Trefis High Quality portfolio offers an alternative — having outperformed the S&P 500 and yielding returns above 91% since its inception. Additionally, refer to – ProKidney: What’s Happening With PROK Stock?
How Does Procter & Gamble’s Valuation Look vs. The S&P 500?
In terms of what you pay per dollar of sales or profit, PG stock appears somewhat pricey in comparison to the broader market.
- Procter & Gamble has a price-to-sales (P/S) ratio of 4.5 compared to a figure of 3.1 for the S&P 500
- Furthermore, the company’s price-to-free cash flow (P/FCF) ratio is 25.1 in contrast to 20.9 for the S&P 500
- Additionally, it has a price-to-earnings (P/E) ratio of 24.3 versus the benchmark’s 26.9
How Have Procter & Gamble’s Revenues Grown Over Recent Years?
Procter & Gamble’s Revenues have seen a slight decline in recent years.
- Procter & Gamble has experienced an average growth rate of 1.8% in its top line over the last 3 years (compared to an increase of 5.5% for the S&P 500)
- It has seen its revenues decline by 0.2% from $84 Bil to $84 Bil in the past 12 months (against a growth of 5.5% for the S&P 500)
- Moreover, its quarterly revenues dropped by 2.1% to $20 Bil in the most recent quarter from $20 Bil a year prior (versus a 4.8% increase for the S&P 500)
How Profitable Is Procter & Gamble?
Procter & Gamble’s profit margins are around the average level for companies within the Trefis coverage universe.
- Procter & Gamble’s Operating Income over the last four quarters reached $20 Bil, which reflects a moderate Operating Margin of 23.8%
- Procter & Gamble’s Operating Cash Flow (OCF) during this timeframe was $19 Bil, indicating a moderate OCF Margin of 22.1% (compared to 14.9% for S&P 500)
- In the previous four-quarter period, Procter & Gamble’s Net Income amounted to $15 Bil — reflecting a high Net Income Margin of 18.5% (versus 11.6% for S&P 500)
Does Procter & Gamble Look Financially Stable?
Procter & Gamble’s balance sheet appears sound.
- Procter & Gamble’s Debt total was $34 Bil at the end of the latest quarter, while its market capitalization stands at $370 Bil (as of 7/9/2025). This results in a strong Debt-to-Equity Ratio of 9.1% (compared to 19.4% for S&P 500). [Note: A lower Debt-to-Equity Ratio is preferable]
- Cash (including cash equivalents) constitutes $9.1 Bil of the $123 Bil in Total Assets for Procter & Gamble. This results in a moderate Cash-to-Assets Ratio of 7.4%
How Resilient Is PG Stock During A Downturn?
PG stock has exhibited an impact that was slightly better than the benchmark S&P 500 index during some recent downturns. Concerned about how a market crash might affect PG stock? Our dashboard How Low Can Procter & Gamble Stock Go In A Market Crash? provides a detailed analysis of the stock’s performance during and after previous market crashes.
Inflation Shock (2022)
- PG stock declined 24.3% from a peak of $163.41 on 28 April 2022 to $123.76 on 10 October 2022, compared to a peak-to-trough drop of 25.4% for the S&P 500
- The stock completely recovered to its pre-Crisis peak by 2 May 2024
- Since then, the stock has risen to a peak of $179.70 on 2 December 2024 and is presently trading at approximately $160
COVID-19 Pandemic (2020)
- PG stock dropped 23.2% from a high of $127.14 on 6 February 2020 to $97.70 on 23 March 2020, in contrast to a peak-to-trough decline of 33.9% for the S&P 500
- The stock fully recovered to its pre-Crisis peak by 28 July 2020
Global Financial Crisis (2008)
- PG stock fell 40.8% from a high of $74.67 on 12 December 2007 to $44.18 on 9 March 2009, as compared to a peak-to-trough decline of 56.8% for the S&P 500
- The stock fully recovered to its pre-Crisis peak by 29 January 2013
Putting All The Pieces Together: What It Means For PG Stock
To summarize, Procter & Gamble’s performance across the mentioned parameters is as follows:
- Growth: Weak
- Profitability: Neutral
- Financial Stability: Strong
- Downturn Resilience: Very Strong
- Overall: Strong
In conclusion, Procter & Gamble has shown strong performance across the critical factors we’ve reviewed. Although the stock may seem somewhat costly when evaluated against the broader market index, it is currently trading slightly below its historical average Price-to-Sales (P/S) ratio of about 4.7 times trailing revenues.
We believe P&G stock holds additional upside potential. Indeed, we assess Procter & Gamble’s valuation to be $182 per share, suggesting a 15% upside from its current position.
However, it is crucial to recognize potential risks. Our evaluation might be incorrect, and investors may be reluctant to assign a higher valuation to P&G due to its recent decline in sales. Investors should exercise caution and weigh the risks linked to falling sales and moderate profitability when making investment choices regarding P&G stock. Remember that there always exists a significant risk when investing in a single stock or just a small number of stocks. Consider Trefis High Quality (HQ) Portfolio which, with a selection of 30 stocks, has a proven track record of comfortably outperforming the S&P 500 over the previous 4-year duration. Why is that? Collectively, HQ Portfolio stocks have yielded better returns with lower risk compared to the benchmark index; less of a roller-coaster experience, as demonstrated in HQ Portfolio performance metrics.
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