Procter & Gamble Stock Rises on Q4 Earnings & Sales Beat, Strong View

Core Insights - Procter & Gamble Company (PG) reported strong fourth-quarter fiscal 2025 results, with sales and earnings per share (EPS) exceeding estimates and showing year-over-year improvement [1][2] - The growth was driven by improved pricing and a favorable product mix across all segments [1][4] Financial Performance - Net sales reached $20.9 billion, a 2% increase year over year, surpassing the Zacks Consensus Estimate of $20.8 billion [2] - Core EPS was $1.48, up 6% from the previous year, beating the Zacks Consensus Estimate of $1.43 [1][7] - Organic sales growth was 2% year over year, with a neutral impact from volume [3] Segment Performance - All segments, including Baby, Feminine & Family Care, Fabric & Home Care, Grooming, and Health Care, saw a 2% increase in net sales year over year [4] - The Beauty segment's net sales remained flat year over year, while organic sales improved by 1% across several segments [4] Margins and Expenses - Core gross margin declined by 70 basis points to 49.1%, impacted by adverse product mix and higher commodity costs [8] - Selling, general and administrative expenses (SG&A) as a percentage of sales decreased by 220 basis points to 28.3%, aided by productivity savings [9] - Core operating margin expanded by 150 basis points to 20.8% [10] Cash Flow and Shareholder Returns - Operating cash flow for the quarter was $5 billion, with adjusted free cash flow of $4 billion [12] - The company returned over $16 billion to shareholders in fiscal 2025, including $9.9 billion in dividends and $6.5 billion in share buybacks [13] Fiscal 2026 Guidance - For fiscal 2026, PG anticipates organic sales growth of flat to 4% and core EPS of $6.83-$7.09, indicating a potential 2% year-over-year growth [14][15] - The company expects a commodity cost headwind of $200 million and a $1 billion cost headwind from tariffs, but also anticipates a currency tailwind of $300 million [16] - Capital expenditure is projected to be 4-5% of net sales, with adjusted free cash flow productivity estimated at 85-90% [17][18]