PG Procter & Gamble
Wonderful brands, mature growth — priced for perfection with no margin of safety.
The story
P&G is a late-lifecycle consumer-staples franchise: iconic brands (Tide, Pampers, Gillette), genuine pricing power, and ~24-25% operating margins sustained for years. But revenue has compounded at only ~2% over five years as pricing tailwinds fade and volumes stagnate against private label. This is a dependable cash-return story, not a growth story, yet the market prices it as a flawless bond substitute.
Facts are unchanged since my last take: ~2% revenue CAGR, margins hovering at 24.4% (recent 25% looks like a peak, not a new normal), and sales-to-capital stuck at ~1.0. I hold all drivers steady — TTM margin sits just above the 24% sustainable target, so margins fade gently rather than expand. The ~2.5% terminal growth is comfortably below the 4.8% risk-free rate, appropriate for a category tied to population and income growth.
Value drivers
| Revenue growth (Y1) | 2.0% |
| Terminal growth | 2.5% |
| Forecast horizon | 5y |
| Target operating margin | 24.0% |
| Years to target margin | 5 |
| Sales-to-capital | 1.00 |
| Beta | 0.65 |
| Failure probability | 0.5% |
| Cost of capital (WACC) | 7.5% |
| Terminal WACC | 8.9% |
Valuation bridge
| PV of explicit FCFF | 63.58B |
| PV of terminal value | 171.88B |
| Equity value | 209.22B |
| ÷ shares → per share | $90.01 |
News
score · 8 articles
- Dow Falls 419 Points as Bond Yields Rise: Stock Market Today
- Why Procter & Gamble’s Quieter Dividend Outpaces Johnson & Johnson’s Growth Story
- Why P&G’s 3% Yield Could Matter More to Long-Term Dividend Investors
- Procter & Gamble (PG) Faces New Shareholder Proposals Ahead Of October 2026 Meeting
- These 3 Dividend Stocks Make a Strong Case for Skipping XLP
- These 3 Dividend Stocks Have Survived Every Recession Since 1970. Retirees Trust Them for a Reason.
- P&G Fiscal 2027 Outlook Brings an 8% Core EPS Headwind Into Focus
- Is P&G Stock Worth Buying as Growth Slows and Valuation Stays Rich?
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 88.77B | 2.0% | 24.3% | 17.12B | 1.74B | 15.38B | 14.31B |
| 2 | 90.66B | 2.1% | 24.3% | 17.42B | 1.89B | 15.53B | 13.45B |
| 3 | 92.70B | 2.2% | 24.2% | 17.75B | 2.04B | 15.71B | 12.66B |
| 4 | 94.90B | 2.4% | 24.1% | 18.11B | 2.20B | 15.91B | 11.92B |
| 5 | 97.27B | 2.5% | 24.0% | 18.50B | 2.37B | 16.12B | 11.25B |
Key risks
- Volume stagnation and private-label substitution as price-driven growth exhausts
- Multiple compression if elevated rates persist and defensive bond-proxy bid unwinds
- Commodity and FX cost swings squeezing a margin already at cyclically high levels
Catalysts
- Rate cuts sparking a defensive/dividend-stock re-rating (yield ~3%)
- Productivity program and premiumization lifting margins above 25% sustainably