P&G stock dips on soft outlook despite 'stable' consumer

Procter & Gamble (PG) stock is being put through a mild wash cycle after a mixed earnings day.

Shares fell 2.5% in early trading as the company reported a muted quarter and outlook amid still high inflation and cautious consumers.

"The consumer is OK and stable," Procter & Gamble CFO Andre Schulten told Yahoo Finance.

Schulten explained that P&G is seeing divergent trends among consumers, however. Higher-income consumers are continuing to spend on P&G's latest innovations. But lower-income shoppers living paycheck to paycheck remain cautious in how they replenish items and what they take off the shelves.  

Those spending trends and an expected $1 billion after-tax hit from raw materials inflation led P&G to issue soft guidance for its new fiscal year.

"Management has warned investors at recent conferences that the U.S. consumer in particular has been more cautious than anticipated," JPMorgan analyst Andrea Teixeira wrote in a note ahead of the results.

Earnings insight: Pressured sales

• Net sales: $21.2 billion, +2% from the prior year vs. $21.34 billion estimate

• Organic sales growth: +0% vs. +1.85% estimate

  • Beauty segment organic revenue growth: +4% vs. +4.2% estimate

  • Grooming segment organic revenue growth: +0% vs. +1.45% estimate

  • Healthcare segment organic revenue growth: -1% vs. +1.78% estimate

  • Fabric and home care segment organic revenue growth: +0% vs. +1.81% estimate

  • Baby, feminine, and family care segment organic revenue growth: -2% vs. +0.77% estimate

• Gross margin: 48.5% vs. 48.3% estimate

• Adjusted earnings per share: $1.43, -3% from the prior year vs. $1.41 estimate

What else caught our attention: A muted outlook

P&G outlined organic sales growth of 1% to 3% for its new fiscal year. For the year, earnings are expected to range from $6.89 to $7.11. Analysts were looking for fiscal year 2027 organic revenue growth of 2.44% and core earnings per share of $7.02.

Brian Sozzi is Yahoo Finance's Executive Editor, host of the 'Power Players With Brian Sozzi' podcast and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

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