Does P&G’s Recent Slide Signal a Long-Term Opportunity for Investors in 2025?

Thinking about what to do with your Procter & Gamble stock? You are not alone. This blue-chip household name has been on quite a ride lately, and even the most patient investors are taking a fresh look at their portfolios. With shares closing at $150.41, they are down 2.0% in the last week and off 6.0% over the past month. Year-to-date, we are looking at a 9.4% dip, and even over the past year, Procter & Gamble is down 7.7%. But zoom out a bit, and you will see a different story: the stock is up 31.1% over three years and 17.8% over five. That is the kind of long-term resilience most companies would envy.

Most of the recent pressure on the share price can be traced back to broader market shifts, especially changing investor attitudes toward dependable, dividend-paying consumer staples, rather than any alarming company-specific developments. When investors start to feel more optimistic about economic growth, they often rotate out of defensive plays like Procter & Gamble and look to riskier corners of the market. That context matters when interpreting price swings; it is not just about the company itself.

So, is this just a speed bump or the sign of something more significant? To answer that, we need to dive deeper into how Procter & Gamble is valued right now. In fact, on our valuation scorecard, the company checks the "undervalued" box in 4 out of 6 key tests, and that is pretty notable. We are about to break down those checks and what they mean. Stick around, because there is an even more insightful way to think about valuation coming at the end of this article.

Procter & Gamble delivered -7.7% returns over the last year. See how this stacks up to the rest of the Household Products industry.

Approach 1: Procter & Gamble Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future free cash flows and then discounting those expected amounts back to today's dollars. Essentially, it is a way of figuring out what all the money a business could generate in the years ahead is worth right now.

For Procter & Gamble, the latest reported Free Cash Flow sits at $14.4 billion. Analyst forecasts indicate this figure will grow at a measured pace, reaching an estimated $17.2 billion by 2028. Looking even further ahead, projections suggest Free Cash Flow could hit roughly $22.5 billion by 2035, although it's important to remember that estimates beyond 2028 are based on trend extrapolation rather than direct analyst coverage.

This model values Procter & Gamble at $195.60 per share today, compared to the current market price of $150.41. That means the DCF analysis suggests the stock is trading at a 23.1% discount to its intrinsic value. This could indicate that shares may be undervalued based on fundamentals.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Procter & Gamble.

Our Discounted Cash Flow (DCF) analysis suggests Procter & Gamble is undervalued by 23.1%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Procter & Gamble Price vs Earnings

The Price-to-Earnings (PE) ratio is a classic valuation metric, especially useful for established, profitable companies like Procter & Gamble. It gives investors a straightforward way to see how much they are paying for each dollar of earnings the company generates. A high or low PE ratio can reflect not only how the company is performing today but also investors' expectations for future growth and their perceived level of risk. Generally, faster-growing and lower-risk companies will trade on higher PE ratios, while slower growth or higher risk tends to pull the ratio lower.

Currently, Procter & Gamble is trading at a PE ratio of 22.4x. In context, this is higher than the average PE for the Household Products industry, which sits at 18.8x, but below the average for its closest peers at 24.2x. These benchmarks suggest Procter & Gamble is valued at a premium compared to the industry but at a small discount relative to its direct peers.

However, a more nuanced measure is the "Fair Ratio," which Simply Wall St calculates based on a range of factors including earnings growth, profit margin, market capitalization, risk profile, and where the company sits within its industry. For Procter & Gamble, the Fair PE Ratio is estimated at 27.6x. This tailored approach goes beyond simple peer or industry averages and aims to capture what the company deserves to trade at based on its own strengths and risks.

Comparing the current PE ratio (22.4x) to the Fair Ratio (27.6x), Procter & Gamble appears undervalued on this key metric.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Procter & Gamble Narrative

Earlier we mentioned there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is a simple but powerful tool that lets you spell out your own story for a company, including your estimates of future revenue, profit margins, and what you believe the fair value should be. It ties together the company’s journey, your assumptions, and the numbers in one place.

Narratives connect the dots between the business outlook and a detailed financial forecast, making it clear how your understanding of the company leads to your view of fair value. They are available for anyone on the Simply Wall St Community page, used by millions of investors to track and update their thinking as new information such as earnings or news arrives.

By comparing your Narrative's fair value to the latest share price, you get a clear indicator of whether you believe the stock is undervalued, overvalued, or fairly priced. This can help inform smarter buy or sell decisions. Narratives update dynamically whenever forecasts or key assumptions change, keeping your investment view agile and relevant.

For example, based on recent Narratives, one investor may see Procter & Gamble as only worth $119.81, while another believes it is worth as much as $186.00, depending on differing expectations for growth and profitability.

For Procter & Gamble however, we’ll make it really easy for you with previews of two leading Procter & Gamble Narratives:

🐂 Procter & Gamble Bull Case

Fair value: $170.95

Undervalued by: 11.9%

Projected revenue growth: 3.26%

• Investments in product innovation, productivity improvements, and cost management are expected to drive higher market share, revenue growth, and expanding profit margins.
• Analysts expect revenues to grow by 3.3% per year and profit margins to improve, which justifies a future PE ratio above the current industry average.
• Major risks include consumer volatility, geopolitical tensions, tariffs, and currency headwinds; however, the consensus still sees upside to the current share price.

🐻 Procter & Gamble Bear Case

Fair value: $119.81

Overvalued by: 25.5%

Projected revenue growth: 4.68%

• P&G remains a stable dividend giant, but growth is expected to slow to match inflation and risk-free rates. This may lead to modest long-term prospects.
• Multiple valuation models (DCF, DDM, historical yield, and P/E) estimate fair value below today’s price, which implies limited upside unless growth surprises occur.
• Margins may face pressure from increased competition. Dividend growth may moderate and payout ratios may gradually rise.

Do you think there's more to the story for Procter & Gamble? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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