Procter & Gamble: Deep Dive: The Cabinet and the Cupboard

Research evidence excerpt

Procter & Gamble: Deep Dive: The Cabinet and the Cupboard

h ~70–85% of a new average buyer in many categories. This should be a bigger focus. *Rev. (MM)

Two Levers, One Outcome: Share. Management estimates the U.S. opportunity at $5b, which is

achievable by our math over time. A 1pp share gain across all key categories equates to ~1% sales We are encouraged by new CEO Shailesh

growth (~$787m), or $0.07 to EPS, assuming a 24% margin. This implies ~6pts of share-equivalent Jejurikar’s focus on P&G’s long-term

upside at today's category dollars. reinvention. It reminds us of when James

Quincey took the helm at Coca-Cola. As

Back on Offense. Execution is improving, though near-term trends remain uneven, with private label

such, we revisit P&G’s long-term opportunity,

gaining share and category growth below trend. But that won't be forever.... Reinvestment is rising,

starting with the U.S. Importantly, our

innovation pipelines are rebuilding, and new products are again contributing incremental growth.

analysis identifies an opportunity for P&G

This new P&G is more focused on new users, premiumization, and loyalty, rather than the dramas

independent of category growth; multiple

of recent years (covid, supply chain, inflation, tariffs, etc.).

loyalty and penetration gaps exist that the

Estimate Revisions: We raise our out-year sales growth estimates (F28+) by ~30bps to ~4%. Better company can address regardless of category

operating leverage puts our 5Y EPS CAGR at 5.5% (from 5%). dynamics.

Thesis: Scale and category breadth create a platform for innovation-led growth. Restructuring

tailwinds are meaningful, and the top line should lever nicely as it returns. Our $179 PT is based

on 23.5x our F28 EPS of $7.60.

Kaumil Gajrawala * | Equity Analyst