Procter & Gamble Co. (PG): First Take: FQ4 EPS beat driven by lower tax rate as underlying trends disappoint - FY27 guidance largely in-line

First-page research excerpt

Equity Research

29 July 2026 | 8:11AM EDT

Procter & Gamble Co. (PG): First Take: FQ4 EPS beat driven by lower tax

rate as underlying trends disappoint - FY27 guidance largely in-line

Our View - PG reported 4Q26 (Jun) EPS beat at $1.43 (vs. GS/FactSet consensus

$1.42/$1.41) as weaker organic sales growth and operating margins were offset by a

greater tailwind from below-the-line items, including a $0.04 tailwind from a lower

tax rate (18.8% vs. GSe 20.7%) in the quarter. PG reported flat FQ4 organic sales (vs.

GS/Visible Alpha Consensus Data +0.9%/+1.6%), well below incoming expectations

that had moved lower heading into the print. The miss was broad-based with all

segments excluding beauty (which benefited from +MSD growth across Personal

Care and Hair Care) delivering weaker than expected organic sales growth. Despite

relatively healthy consumption trends indicated by scanner data, PG’s organic sales

miss suggests that shipments likely lagged consumption (we expect to get

incremental details on this dynamic during PG’s earnings call this morning). However,

FQ4 gross margins of 49.1% came ahead of expectations (vs. GS/consensus 48.0%)

as benefits from productivity (+160bps), net tariff benefits (+40bps) and pricing

(+10bps) were offset by headwinds from unfavorable product mix (-120bps),

reinvestments (-70bps), costs, and commodity costs (-40bps). Coupled with a higher

SG&A spend of +6.2% (vs. GS/consensus -0.1%/+1.5% YoY), operating margins of

19.5% missed expectations (vs. GS/consensus 20.1%/20.0%). That said, a lower tax

rate of 18.8% (vs. GSe 20.7%) was a $0.04 tailwind to EPS and aided PG’s FQ4 EPS

beat.

Bonnie Herzog

+1(212)902-0490 |

Goldman Sachs & Co. LLC

Ankit Prasad

+1(212)934-6394 |

Goldman Sachs India SPL

Ethan Huntley

+1(617)772-7940 |

Goldman Sachs & Co. LLC

Nicholas Vidger

+1(212)934-0631 |

Goldman Sachs & Co. LLC

Shanika Paul

+1(212)902-7136 |

Goldman Sachs & Co. LLC

Moreover, mgmt provided its FY27 guidance, which was largely in line with our

expectation of low and relatively wide ranges on the top- and bottom-line given

pressured demand trends, elevated cost headwinds, and continued macro volatility.

…