Are PG's Beauty and Health Units Driving the Next Leg of Growth?

Core Insights - Procter & Gamble (PG) is committed to enhancing health and beauty through product innovations and corporate social responsibility initiatives aimed at global well-being [1][10] - The company identifies significant growth opportunities in oral care, particularly with the launch of the iO2 electric toothbrush, projecting a $5 billion market potential [2] - PG is focused on innovation in its beauty segment, particularly in skin care and super-premium offerings, while maintaining a strong presence in department stores [3] Beauty Segment Performance - In the third quarter of fiscal 2025, the beauty segment accounted for approximately 18% of total sales, with organic sales increasing by 2% year over year [4] - Hair care organic sales remained flat due to higher pricing in Latin America and North America, offset by lower volumes in Greater China [4] - Personal care organic sales grew in the high single digits, driven by innovation-led volume growth, while skin care organic sales saw a slight decline [4] Health Care Segment Performance - The health care segment represented around 15% of total sales in the fiscal third quarter, with organic sales rising by 4% [5] - Oral care organic sales improved in the low single digits, supported by premium product innovations, while personal health care organic sales increased in the high single digits [5] - Projections indicate organic sales growth of 2% in the beauty segment and 5% in the health care segment for the fourth quarter of fiscal 2025 [5] Competitive Landscape - Major competitors in the beauty and health sector include Colgate-Palmolive and The Clorox Company [7] - Colgate focuses on strengthening its key product categories and expanding into new markets, with oral, personal, and home care accounting for 77.6% of its total sales [8] - Clorox emphasizes health and wellness, with its health and wellness segment contributing 37.8% to overall quarterly sales, showing a net sales growth of 3% [9][11] Financial Performance and Estimates - Procter & Gamble's shares have declined by approximately 3.7% year to date, compared to a 0.7% dip in the industry [12] - The company trades at a forward price-to-earnings ratio of 22.94X, higher than the industry average of 20.46X [13] - The Zacks Consensus Estimate indicates year-over-year EPS growth of 2.9% for fiscal 2025 and 3.6% for fiscal 2026, with stable estimates for fiscal 2025 and upward revisions for fiscal 2026 [14][15]