A reader wrote in this week to ask whether Procter & Gamble is a good stock. Here is the honest answer from a firm that owns it, delivered the only honest way: by showing you the invoice.
The Quarter and the Warning
P&G gave a soft outlook for its new fiscal year. It expects a $1 billion hit from higher costs tied to the Iran war.
The maker of Crest and Pantene also earned less in its latest quarter. Higher costs and sluggish sales did the damage.
“As we enter fiscal ’27, we continue to expect the environment around us to remain volatile and challenging,” Chief Financial Officer Andre Schulten told analysts. The stock closed down 1.8% that day.
Fourth-quarter profit was $3.04 billion, or $1.26 a share. A year earlier it was $3.62 billion, or $1.48. Adjusted earnings of $1.43 did beat the $1.41 estimate.
Sales ticked up 2% to $21.2 billion, short of the $21.38 billion analysts wanted. Organic sales — the figure that strips out currency and deals — were flat.
What $90 Brent Costs a Soap Company
The war costs come from raw materials, energy and transportation. P&G’s guidance assumes the conflict stays roughly where it is, with Brent crude around $90 a barrel.
Add freight surcharges, supplier inflation and force majeure fees — charges triggered when events outside anyone’s control disrupt a contract. It adds up quickly.
For the year ahead, adjusted earnings per share are guided flat to up 3%, about $7 at the midpoint. Sales growth is projected at 1% to 3%. First-quarter earnings are likely to be down 5% or more, with most of the pain landing in the first half.
Management deliberately left room for weaker demand. Right now, executives said, shoppers are looking for maximum value and are more discerning. Underline that sentence.
The Pairing, Written Out
P&G sits on our July 17 reinforce list beside Coca-Cola and Clorox. Defensive names are the ballast of the tilt we carried into this Fed. This quarter is the bill for that ballast.
Watch what the two halves of the Capital Wealth Growth Portfolio did to each other this week. P&G pays $90 Brent, a billion dollars of it, named in a press release.
Chevron receives it. That is not a flaw in the construction. That is the pairing doing its job.
The staple absorbs the war cost. The major collects it. The client owns both sides of the same invoice.
Hold only one side and you are not diversified. You are betting on a ceasefire, or against one.
It also explains why we size energy the way we do. The hedge is not there to win in a good year. It is there to send a check to the part of the portfolio writing one.
This week both entries landed in the same ledger on the same day. We will not get a cleaner demonstration for a while.
So: is P&G a good stock? It is a good ballast holding, which is not the same question.
Ballast does not win races. It keeps the boat upright while the water gets rough, and it feels useless right up until it does not.
The company still sells things people buy in any economy. Toothpaste demand does not track a Fed meeting.
What it cannot do is dodge the cost of a barrel. That is why we do not ask it to.
There is a competing view worth reading next to this one. Some analysts argue China can flex its crude demand enough to cap the oil price, which would take pressure off both sides of the trade.