PG

Procter & Gamble Co

PG
—
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Procter & Gamble Co AI Insights

Informational only. Not investment advice.
As of 2025-12-08

Snapshot

  • Negative working capital of -10.9B TTM means suppliers finance operations - PG collects before paying, a structural cash advantage rare at this scale.[Working Capital]
  • Goodwill of 41.6B is 79% of equity (52.5B) - acquisition-heavy history creates impairment risk if brand values decline.[Goodwill]
  • ROE TTM of 32.4% vs industry median of -38.8% - exceptional capital efficiency driven by brand pricing power and lean asset base.[Return on Equity]

Watch Triggers

  • Gross Margin TTM: Falls below 48% — Would signal pricing power erosion or input cost absorption - threatens dividend coverage
  • Goodwill: Impairment charge >5B announced — Would indicate brand value destruction and trigger equity writedown, potentially breaching covenants
  • Free Cash Flow TTM: Falls below 12B — Current 10.1B dividend commitment requires 12B+ FCF floor for safety margin

Bull Case

Cash machine: 18.9B operating cash flow TTM with negative working capital (-10.9B) means growth is self-funding. FCF of 14.9B supports buybacks and dividends without leverage increase.

Free Cash Flow TTMWorking CapitalOperating Cash Flow TTM

Defensive moat: 51% gross margin and 32% ROE in consumer staples indicates pricing power. Asset turnover 0.67x vs median 0.19x shows efficient brand monetization.

Gross Margin TTMROE TTMAsset Turnover TTM

Bear Case

Intangible-heavy balance sheet: 63.5B goodwill/intangibles exceeds total equity (53.3B). Tangible book value is -11B - no hard asset floor if brands lose relevance.

Goodwill and Other Intangible AssetsTangible Book ValueTotal Equity

Mature growth profile: 84.9B revenue base limits upside. P/E of 20.2x at industry median prices in stability, not growth - multiple expansion unlikely.

Total Revenue TTMP/E RatioP/S Ratio

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

BearBull
62%

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Forward Thesis

FCF generation to sustain 4.0%+ dividend yield with mid-single-digit growth through 2027

1-3yhigh
  • 14.9B FCF TTM covers 10.1B dividends with 48% cushion
  • Negative working capital amplifies cash conversion
  • Capex at 4.7% of revenue leaves room for shareholder returns
FCF margin 17.6% TTM on 84.9B revenueDividend per share 4.13 TTM, 60% payout ratioOperating cash flow 18.9B TTM

Operating margins to compress 50-100bps if commodity inflation persists without pricing offset

3-12mmed
  • Cost of revenue 41.6B is 49% of sales
  • Gross margin 51% leaves limited buffer vs premium positioning
  • Interest expense 866M rising with 36B total debt
Operating margin 24.1% TTMDebt/equity 0.68 manageable but rising rates pressureNet margin 19.7% TTM
Valuation Context
Caveats

Public Strategies Rankings

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