Can Procter & Gamble's Pricing Power Keep Earnings Buoyant in 2025?

The Procter & Gamble Company’s PG pricing strength serves as a vital pillar of its overall business strategy, which looks to enrich consumer value, boost profits and retain a competitive edge. PG’s value-based pricing approach across categories like laundry detergents enables it to reduce dependence on promotional discounts, alongside maintaining competitive pricing and sustaining market share.PG’s pricing strategy extends beyond price hikes and controls, complemented by ongoing product innovations and launches that drive value and validate premium positioning. Procter & Gamble has innovations across all price tiers within the Fabric Care Tight, Oxy Boost and Power Pods. The company is focused on optimizing skincare pricing in China, complemented by super-premium innovations under the SK-II portfolio, which is aimed at expanding its market share in the region.In the recent past, the company has successfully navigated elevated commodity costs, supply-chain disruptions, inflationary headwinds and currency volatility by its strategic pricing and productivity measures, reaffirming its commitment to steady margin growth. PG’s pricing power has also offered resilience in tough times, like the pandemic. The company’s goal is to regain pre-pandemic productivity levels, with a target of accomplishing gross savings in the cost of goods sold of up to $1.5 billion, before tax.In third-quarter fiscal 2025, pricing rose 1% and aided organic sales and gross margin. Our model anticipates pricing gains of 0.6% each for the fourth quarter and fiscal 2025. This is likely to continue bolstering organic sales, which we anticipate growing 1.9% and 2%, respectively, for the fourth quarter and fiscal 2025.As Procter & Gamble has an extensive portfolio with diverse price points and pack sizes, it continues to evaluate consumer pricing in effective categories and markets to ensure competitiveness. The company targets pricing with innovation and is focused on implementing pricing actions, which are likely to drive sustained growth and profitability.PG’s Competition in Pricing DominanceColgate-Palmolive Company CL and The Clorox Company CLX are the major companies competing with Procter & Gamble in pricing strength.Colgate also leverages its pricing power to aid growth and offset external cost pressures. The company is benefiting from key pricing actions, coupled with its funding-the-growth program and other productivity moves, aimed at driving efficiency and expanding margins. It has revamped its innovation model, leveraged its global scale across price tiers, invested in marketing and reinforced operational capabilities, all to drive brand health and higher household penetration. In first-quarter 2025, Colgate's organic sales were driven by a 1.5% improvement in pricing. We expect the company to benefit from pricing of 2.5% in 2025. Colgate’s competitive pricing moves across its premium oral and personal care products will continue to bolster brand strength and retain market share.Clorox also places strong emphasis on pricing. The company’s strategic pricing and cost-saving measures have been boosting gross margin expansion in recent periods. Despite the sales decline in third-quarter fiscal 2025, the gross margin expanded 240 basis points year over year, marking the company's 10th consecutive quarter of margin expansion. Clorox’s holistic margin-management efforts, constant product innovations and IGNITE strategy progress well. Clorox’s multi-faceted pricing policy includes premium pricing for its core brands, with a focus on premiumization and value for consumers. Our model anticipates price/mix/other to grow 0.2% in fiscal 2025.PG’s Price Performance, Valuation and EstimatesProcter & Gamble’s shares have lost around 3.8% year to date compared with the industry’s 1.8% dip.Image Source: Zacks Investment ResearchFrom a valuation standpoint, PG trades at a forward price-to-earnings ratio of 22.67X, compared with the industry’s average of 20.19X. Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for PG’s fiscal 2025 and 2026 EPS indicates year-over-year growth of 2.9% and 3.6%, respectively. The company’s EPS estimate for fiscal 2025 has been stable and that for fiscal 2026 has moved northward in the past 30 days.Image Source: Zacks Investment ResearchProcter & Gamble currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Procter & Gamble Company (The) (PG): Free Stock Analysis Report Colgate-Palmolive Company (CL): Free Stock Analysis Report The Clorox Company (CLX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks