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By Brian Nelson, CFA
On January 22, Procter & Gamble (PG) reported results for the second quarter of fiscal 2026 that were mixed. The company missed estimates on the top line but beat expectations on the bottom line. Net sales increased 1%, but organic sales were unchanged versus the prior year. Core earnings per share came in at $1.88, in-line versus the prior year. Operating cash flow was $5.0 billion, while net earnings were $4.3 billion for the quarter. Adjusted free cash flow productivity, as measured by operating cash flow less capital spending as a percentage of net earnings, was 88%. P&G returned $4.8 billion to shareholders, split between $2.5 billion in dividend payments and $2.3 billion of share repurchases.
Management had the following to say about the results:
Our results in the second quarter keep us on track to deliver within our fiscal year guidance ranges for organic sales growth, core EPS growth and adjusted free cash flow productivity in a challenging consumer and geopolitical environment. We have confidence in our plans to deliver stronger results in the second-half of the fiscal year. We remain committed to our integrated growth strategy and are excited by the opportunity ahead to reinvent P&G and create the CPG company of the future, delivering long-term balanced top- and bottom-line growth and value creation.
Looking to fiscal 2026, Procter & Gamble maintained its guidance for all-in sales growth to be in the range of 1%-5% versus the prior year. Organic growth is targeted in the range of in-line to up 4% versus the prior year. P&G lowered its outlook for diluted net earnings per share growth to be in the range of 1%-6% down from prior guidance of 3%-9% versus fiscal 2025, reflecting higher non-core restructuring charges in the year. The company maintained its fiscal 2026 core earnings per share growth to be in the range of in-line to up 4% versus fiscal 2025 core earnings per share of $6.83, equating to a range of $6.83-$7.09 per share, the midpoint up 2% year-over-year. We like P&G but don’t include shares in any newsletter portfolio. Shares yield 2.9% at the time of this writing.
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Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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