P&G(US:PG) ZACKS·2026-02-12 18:11Core Insights - Procter & Gamble's stock has gained 10.5% in the past month, driven by its second-quarter fiscal 2026 results, which have renewed investor confidence [1][2][8] Stock Performance - The stock's 10.5% growth outperformed the Consumer Products - Staples industry (9.9%) and the Consumer Staples sector (9%), while also surpassing the S&P 500 index's decline of 0.8% [2] - Procter & Gamble's stock is currently trading at $160, which is 16.3% above its 52-week low of $137.62 and 11.1% below its 52-week high of $179.99 [6] - The stock has moved above its 50 and 200-day moving averages, indicating bullish sentiment [6] Financial Performance - In Q2 fiscal 2026, Procter & Gamble reported a 1% year-over-year sales growth, but earnings per share (EPS) remained flat due to margin contraction from higher costs [8][9] - The company anticipates 1-6% net EPS growth for fiscal 2026, with a core EPS guidance of flat to 4% growth compared to fiscal 2025's core EPS of $6.83 [11][15] - The core gross margin declined by 50 basis points year-over-year to 51.9%, while the reported gross margin fell by 120 basis points [12] Challenges - Elevated commodity and input costs are significantly impacting Procter & Gamble's gross margin profile, limiting margin expansion [12] - The company faces a $400 million headwind from tariffs, which adds pressure to sourcing and manufacturing costs [13][14] - Recent downward revisions in EPS estimates reflect concerns about the company's near-term earnings growth trajectory [17] Valuation - Procter & Gamble trades at a forward P/E ratio of 22.34X, which is higher than its competitors, including Kimberly-Clark (15.07X), BJ's Wholesale Club (21.27X), and Albertsons Companies (8.44X) [21][22] - The current valuation is below its five-year high of 26.67X but above the broader industry's multiple of 19.59X [21] Outlook - Despite recent stock momentum, the company's outlook suggests limited upside potential due to soft EPS performance and margin pressures [25]