Procter & Gamble: Resilient Blue Chip, Early Observer of Slowdown
Company Update (PG US) (Buy): Shares are just above their 52-week low after management cut FY25 outlook.
Highlights
Q4 FY25 organic sales growth now expected to be +0.5-4.5%.
Consumer spend appears to have slowed sector-wide since Feb.
P&G is a resilient business and has less downside than other sectors.
Shares are at ~24x FY25 EPS and have a 2.6% Dividend Yield.
At $160.90, we expect a 35% total return (10.4% IRR) by Jun-28. Buy.
Introduction
We review our Buy rating on Procter & Gamble (“P&G”) as shares hover just ~3% above their 52-week low, having fallen 5.7% since Donald Trump announced his “reciprocal tariffs” on April 2; they are down 3.0% in the past year:
P&G Share Price (Last 1 Year)
Source: Google Finance (12-May-25).
We initiated our Buy rating on P&G in January 2024, and shares have gained 10.6% since. We also included P&G in our “Select 15” model portfolio between March and June last year, and again between October and November, generating a low-single-digit percent profit each time. We last published our P&G research online in November.
We continue to see P&G as a good investment for defensive investors, with solid likely returns and limited downside. Recent share price weakness has been the result of P&G being among the first to experience the deterioration in U.S. consumer confidence, but conversely expectations are more realistic and the range of outcome narrower than elsewhere.
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