P&G Stock: Riding High After An Upbeat Q2 - What Lies Ahead?

Core Insights - Procter & Gamble (P&G) reported Q2 fiscal 2025 results with revenues of $21.9 billion and adjusted earnings of$1.88 per share, surpassing consensus estimates of $21.5 billion and$1.86 respectively, driven by increased sales of household staples [1][4] - The company's revenue reflected a 2% year-over-year increase, with volume up 1% and a 1% contribution from product mix, despite flat pricing [3] - P&G's core operating margin contracted by 80 basis points to 26.2%, but adjusted earnings per share grew by 2% year-over-year due to higher revenue and a decline in shares outstanding [4] Segment Performance - Beauty sales remained flat year-over-year, with skin care products experiencing a low single-digit decline and hair care sales down in mid-single-digits, while personal care sales increased in double-digits [3] - Grooming sales increased by 1%, Health Care revenue rose by 2% mainly due to a favorable product mix, and Fabric & Home Care sales also grew by 2% on volume gains [3] - Baby, Feminine & Family Care sales increased by 3%, primarily driven by strong family care sales [3] Stock Performance and Outlook - P&G stock has risen 15% since the beginning of 2024, but has underperformed the S&P 500 index, which is up 28% [2] - The company maintains its organic sales growth outlook of 3% to 5% for 2025, with expected earnings per share in the range of $6.91 to$7.05 [4] - The estimated valuation for P&G is $175 per share, based on a 25x P/E multiple and expected earnings of$6.94 per share for the full fiscal 2025 [7]