Karishma Vanjani

Procter & Gamble stock was falling after the group that owns marquee brands including Tide cut its prediction for earnings this fiscal year and discussed a round of price increases due to tariffs.

The company reported earnings per share (EPS) of $1.54 for the third fiscal quarter that ended in March on Thursday morning. Analysts had forecast EPS of $1.52. Sales at $19.8 billion for the quarter were lower than the market consensus of $20.2 billion.

"We delivered modest organic sales and EPS growth this quarter in a challenging and volatile consumer and geopolitical environment," CEO Jon Moeller said in the press release.

The stock fell 3.9% to $159.31 at market open.

The outlook likely weighed on the stock. P&G said it now expects fiscal 2025 core earnings to be in the range of $6.72 to $6.82 per share. In January, it had forecast between $6.91 and $7.05 per share. Its fiscal year will end in June.

The company "will likely" increase prices of its goods sometime after June, Moeller said in an interview with CNBC. Management said the company is considering "some level of consumer pricing" in a call discussing earnings.

China, a source of raw materials and finished products, is the largest source of tariff-related costs for the company.

P&G has hiked prices several times in prior quarters when reporting earnings. It previously attributed rises to inflation, heightened tensions in the Middle East, and unfavorable commodity costs.

The investment thesis for betting on P&G stock has long been that the company's products -- think Oral-B, Pampers -- are a consumer staple. Many of its products are entrenched within households, giving the firm the ability to pass on some of the increases it sees in costs to consumers.

The question then becomes at what point do the consumers buckle. China is another issue -- P&G has frequently talked about a soft consumer market in the country, and in the latest call discussing earnings said "recovery in China will take time and won't be a straight line."

"We view PG as a high-quality Sector Perform name but are not ready to step in with fresh capital at the current valuation," wrote RBC Capital Markets analyst Nik Modi. He has a price target of $164 on the stock.

Modi acknowledged the company is much better positioned to deal with macro pressures today versus during the 2008-09 financial crisis, given P&G has created more pricing tiers and enhanced innovation. But added: "We see headwinds in China and the Middle East and would expect these regions to continue to weigh on performance."

Write to Karishma Vanjani at karishma.vanjani@dowjones.com.

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April 24, 2025 10:06 ET (14:06 GMT)

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