P&G's Slow Growth Guidance Keeps Me on the Sidelines

Procter & Gamble (PG) shares are hovering around $144, only about 5% above their 52-week low of $137.62. At this price, the consumer staples giant behind Tide detergent and Pampers diapers yields a little over 3%. A beaten-down blue chip with a yield like that would usually have me interested.

However, the guidance P&G issued alongside its fiscal 2026 fourth-quarter report last week explains why I'm not buying yet. Management expects organic sales growth of 1% to 3% and core earnings per share of $6.89 to $7.11 in fiscal 2027.

The midpoint of that range, $7.00, implies growth of less than 2%, while the high end implies just 3%. The guide came in slightly below what analysts were expecting, but it's not just a small gap that bothers me - it's the reason for the soft outlook.

P&G expects about $1 billion in after-tax headwinds from higher raw-material, energy, and transportation costs in fiscal 2027. This includes $150 million in higher net interest expense, another $150 million in lower non-operating income, and $50 million in unfavorable currency.

Altogether, management says that's a $0.56-per-share drag - about 8 percentage points of core earnings-per-share growth wiped out before the year begins. Of course, this also suggests something positive about the business underneath: strip out those headwinds, and P&G would be growing core earnings per share at about 10%.