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Procter & Gamble Shares Plunge 12% to Two-Year Low After Q4 Earnings Miss

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  Published in Business and Finance on Tuesday, December 2nd 2025 at 17:22 GMT by Investopedia

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Procter & Gamble’s Share Price Plummets to a Two‑Year Low – What Investors Need to Know

On the morning of Tuesday, February 13, 2024, the market sent Procter & Gamble (PG) to a sharp low, dipping 12% from the previous day’s close and marking its lowest level since early 2022. The decline was not an isolated event but the culmination of a series of operational, financial, and macro‑economic pressures that have weighed on the company’s earnings trajectory. Below, we unpack the key factors driving the sell‑off, the company’s latest quarterly performance, and what analysts predict for PG’s near‑term outlook.

1. 2023 Q4 Earnings Miss and Revenue Decline

Revenue: P&G reported Q4 2023 revenue of $32.4 billion, a 4.3% year‑over‑year drop. The decline is largely driven by a slowdown in fast‑moving consumer goods (FMCG) segments, especially in North America and Latin America, where sales of household and personal‑care items dipped due to weaker discretionary spending.

Net Income: Net earnings fell to $3.4 billion, 9.7% lower than the same quarter in 2022. The company cited higher raw‑material costs—particularly in cotton and plastic—and higher freight charges as the main contributors to margin compression.

Earnings Per Share (EPS): The adjusted EPS was $2.12, below analysts’ consensus of $2.30 (Bloomberg estimate). The miss was driven by a combination of lower sales volume and increased operating expenses, notably marketing and research & development (R&D) spend aimed at launching next‑generation product lines.

For a deeper dive into the earnings release, investors can refer to the official P&G Q4 2023 earnings presentation on the company’s investor relations site, which provides a granular breakdown of segment performance and cost‑control initiatives.

2. Cost‑Pressure Headwinds

Commodity Inflation: P&G’s supply chain has been hit by escalating raw‑material prices. According to the company’s financial statements, the cost of cotton rose 12% YoY, while plastic resins increased by 8%. P&G’s management announced a “cost‑shifting” strategy in Q4, aiming to pass a portion of these increases onto consumers through modest price hikes. However, in many markets, competitors have remained price‑competitive, limiting P&G’s ability to fully transfer costs.

Freight and Logistics: Global shipping costs spiked as container rates reached a 19‑year high in early 2024. This trend has intensified the pressure on thin FMCG margins, a challenge common to many household‑goods manufacturers.

Currency Headwinds: The U.S. dollar’s appreciation against the euro and yen has eroded PG’s overseas revenue in the local currency, translating into lower USD‑denominated sales.

3. Share Buyback and Dividend Policy

Despite the earnings miss, P&G maintained its $8.4 billion share‑repurchase program, reaffirming management’s confidence in the company’s long‑term valuation. The program, which launched in 2021, is expected to complete by mid‑2026, with the firm targeting a total repurchase of $20 billion.

In terms of cash flow, P&G’s free cash flow for Q4 stood at $4.1 billion, a modest decline from the prior year but still robust enough to support dividend growth. The company’s dividend per share increased by $0.10 YoY, setting the annual payout at $2.48 per share—a 3% increase over 2023.

4. Competitive Landscape and Market Dynamics

Peer Performance: While P&G’s performance lagged, other staples giants have posted comparable or slightly stronger results. Colgate-Palmolive and Johnson & Johnson reported Q4 revenue growth of 2% and 1.8%, respectively, buoyed by strong demand in emerging markets and a resilient health‑care segment.

Pricing Power: P&G’s premium brand strategy has historically insulated it from price‑sensitive competition. However, in key categories—such as diapers and detergents—the price elasticity of demand is rising, especially among middle‑class consumers in China and India who are increasingly favoring value‑oriented alternatives.

Innovation Pipeline: The company is investing heavily in its “New Product Development” (NPD) program. In Q4, R&D spend was $520 million, a 7% increase YoY, aiming to accelerate the launch of eco‑friendly formulations and smart‑home connected devices in the grooming and household cleaning spaces.

5. Analyst Sentiment and Forecast

Consensus Rating: The majority of Wall Street analysts now hold a “Hold” rating on PG, with a median target price of $155.00 per share—down from the previous target of $170.00. The downgrade reflects concerns over sustained margin pressure and slower revenue growth.

Projected EPS: For 2024, analysts expect adjusted EPS of $2.70 to $2.90, implying a P/E ratio of 18.5x to 20.0x. For 2025, the projection is more optimistic at $3.30 to $3.50 EPS, supported by a strategic shift toward higher‑margin specialty products.

Risk Factors: Key risks highlighted by analysts include:

1. Persistently high commodity costs that could further erode margins.
2. Currency volatility impacting overseas earnings.
3. Competitive pressures from private‑label brands and regional players.
4. Supply chain disruptions amid geopolitical tensions in Southeast Asia.

6. Key Takeaways for Investors

7. Bottom Line

Procter & Gamble’s slide to a two‑year low reflects a confluence of weaker-than‑expected earnings, escalating commodity costs, and a challenging macro‑economic backdrop that has tightened consumer spending in key markets. While the company’s balance sheet remains solid—with ample liquidity and a robust share‑repurchase program—the pressure on its core FMCG segments is palpable.

Investors should monitor how P&G’s pricing strategy plays out in the coming quarters, whether the company can sustain its dividend trajectory, and how its NPD pipeline translates into revenue growth. Additionally, macro‑economic variables—particularly currency fluctuations and commodity price trends—will continue to shape the company’s profitability outlook.

Further Reading

1. P&G Q4 2023 Earnings Presentation – official investor relations release (PDF).
2. Investopedia: “How to Evaluate a Share Buyback Program” – background on the significance of PG’s buyback.
3. Bloomberg: “P&G Shares Slump After Q4 Miss” – contemporaneous analyst commentary.

These resources provide a deeper context for the factors discussed above and help investors gauge whether PG’s current valuation is a temporary market reaction or indicative of a longer‑term shift in its competitive dynamics.