P&G Rallies Under New CEO but Lags Rivals, Faces Tariff Challenges

Core Insights - Procter & Gamble (P&G) has seen a year-to-date stock increase of 11.65%, reaching $160 per share, but lags behind competitors like Clorox, Colgate-Palmolive, and Church & Dwight, which have gains of 24.91%, 20.62%, and 19.81% respectively [1] - The company faces significant tariff challenges, estimating $900 million in tariff headwinds, which could impact its projected organic sales growth of flat to 3% for fiscal 2026 [1] - P&G's valuation appears stretched with a trailing earnings multiple of 23.6x and a PEG ratio of 4.835, indicating limited growth justification compared to peers [1] Leadership Transition - Shailesh Jejurikar became the new CEO on January 1, 2026, succeeding Jon Moeller, amid a challenging market environment [1] - Under Jejurikar's leadership, P&G reported Q4 fiscal 2025 organic sales growth of approximately 2% and core EPS of $1.48, up 6% year-over-year [1] Tariff Impact - P&G's tariff exposure includes approximately $300 million from China and $600 million from other regions, leading to planned mid-single-digit price increases on about 25% of affected SKUs [1] - CFO Andre Schulten indicated that any favorable tariff shifts may not lead to sustained pricing relief, presenting a dilemma between absorbing costs or raising prices [1] Valuation Concerns - P&G's current trading multiples are high relative to its growth prospects, with a forward earnings multiple of 22.73x, while competitors like Clorox and Colgate-Palmolive have lower multiples and stronger revenue growth [1] - Despite its defensive characteristics and a history of 68 consecutive years of dividend increases, P&G's performance has been underwhelming compared to its sector peers [1] Dividend and Shareholder Returns - P&G offers a dividend yield of 2.63% and returned $16 billion to shareholders in fiscal 2025, including $9.9 billion in dividends, supported by a 31.6% return on equity and a 26.3% operating margin [1] - The dividend appears secure, but the company faces uncertainties due to tariff pressures and leadership changes impacting its near-term outlook [1]