QS Research · Michael Burry's Scion Capital analyst template · 2006
PROCTER & GAMBLE Co (PG)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction low · base case +0% · downside -3% · upside +3%
P&G is a high-quality but slow-growing staple: TTM to Sep 30, 2026 revenue of $87.92B produced $19.83B EBIT, $23.04B EBITDA, $15.73B net income to common and $15.34B free cash flow, and at $165.40 the market pays 24.4x P/E, 17.7x EV/EBITDA and 4.63x EV/Sales. Section 13's -22%/+31% cases use peer EV/EBITDA multiples, which is a valuation-driven rerating; keeping today's 24.4x P/E and moving TTM net income by the cited guidance/consensus gives base ~$165.8 (+0.1%), downside ~$161.1 (-2.6%) on Zacks' -2.7% EPS expectation, and upside ~$170.6 (+3.1%) on the top end of FY2027 core EPS growth. The balance sheet is not the issue, with net debt of $23.56B only about 1x TTM EBITDA of $23.04B, but the multiple already discounts modest growth and the FY2027 $0.79/share cost drag. This is a fair price with no deep-value edge; pass.
Key numbers
- Share price: $165.40
- Market cap: $383.36B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $87.92B
- EV / EBITDA (TTM): 17.7x
- P/E (TTM): 24.4x
The 15 boxes
- ✓ 1. Long-form business notes
P&G is a 180-country branded consumer goods company that creates, manufactures, markets and distributes daily-use products through retail, digital commerce and direct-to-consumer channels; Walmart and affiliates were about 16% of total sales in 2026 and the top ten customers about 43%. From FY2021 to FY2026, revenue rose from $76.12B to $87.03B, operating income from $17.99B to $19.75B and net income to common from $14.04B to $15.75B, while capex rose and buybacks fell. The provided business sections do not give segment-level sales, margins or unit economics, pointing instead to MD&A and Note 2.
- ○ 2. Competitive advantage
The sources show a brand- and scale-based advantage, not a cost or network one: operating margin held between 22.1% and 24.3% in every year FY2021-FY2026 (FY2026 22.7% on $19.75B operating income / $87.03B revenue; FY2025 24.3%), and the 10-K itself says financial success 'directly depends' on brands with worldwide recognition. Revenue grew only 14.3% over five years (FY2021 $76.12B to FY2026 $87.03B, about 2.7% a year) while margins were defended, which reads as pricing power rather than volume-led growth. Competition is broad and intensifying: the 10-K cites a wide and increasing number of global and local competitors, private label and generic products, hard discounter channels and concentrated retail customers. The 10-K gives no market-share, gross-margin or return-on-capital data, so the advantage is inferred from margin stability and cash generation, not measured head-to-head.
- ✓ 3. 10-Q takeaways
The quarter ended 30 Sep 2026 (Q1 FY2027) showed 4.0% net sales growth to $23.3 billion, all of it organic (volume +2.4%, mix +1.1%, price +0.4%), but gross margin fell 160 bp to 49.8% on higher commodity costs and product reinvestment, leaving operating margin down 70 bp at 25.5% and net earnings down 1% to $4.8 billion; diluted EPS still rose 1% to $1.97 and Core EPS 1% to $2.00. Cash was strong: operating cash flow $5.8 billion, free cash flow $4.4 billion, 93% free cash flow productivity, with $3.9 billion returned via $2.6 billion of dividends and $1.3 billion of buybacks. FY2027 guidance is numeric and was only changed for the Thorne acquisition: all-in sales +2-4%, organic +1-3%, core EPS $6.89-$7.11 (in-line to +3% off $6.89), against a $1.4 billion after-tax commodity headwind. The 10-Q itself adds no new risk factors, referring back to the FY2026 10-K.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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