Can Procter & Gamble's $15B Shareholder Return Offset Tariff Headwinds?

The Procter & Gamble Company PG commitment to return roughly $15 billion to shareholders in fiscal 2026, including $10 billion in dividends and $5 billion in share repurchases, signals strong financial health and disciplined capital allocation. Yet the key question is whether this sizeable return can meaningfully counterbalance the company’s growing tariff-related pressures.

According to management, PG now expects about $500 million in before-tax tariff costs in fiscal 2026, a significant but reduced headwind compared with earlier projections. Several tariff exclusions on natural ingredients and the removal of retaliatory duties have helped soften the blow. However, these costs come alongside added supply-chain investments and pricing adjustments, limiting net relief. Consequently, tariffs continue to pose a structural uncertainty, limiting earnings visibility and weighing on PG’s fiscal 2026 EPS growth outlook.

Notably, PG has mitigated tariff-related cost pressures through its mitigation efforts, including selective price increases for various products. It has executed these increases effectively by leveraging the strength of its household staple brands and the relatively inelastic demand in core categories like baby care, fabric care and hygiene.

Despite these tariff headwinds, the company’s robust cash flow generation and 102% adjusted free cash flow productivity in first-quarter fiscal 2026 highlight its ability to simultaneously fund investments and return capital to shareholders. Management emphasized that protecting financial flexibility is crucial, particularly as PG invests in innovation, productivity and restructuring, including up to 7,000 non-manufacturing role reductions, to strengthen long-term competitiveness.

PG reaffirmed its full-year outlook: organic sales growth of up to 4% and core EPS growth of up to 4%, despite tariff costs, promotions and a challenging landscape in the US and Europe. This consistency suggests confidence that productivity gains, pricing for innovation and improving momentum in key markets like China and Latin America will help offset near-term cost pressure. Ultimately, while shareholder returns alone cannot erase tariff headwinds, they bolster investor confidence by underscoring PG’s resilience and long-term capability to deliver balanced growth even in a tougher external environment.

PG’s Peers: How CL & CHD Manage Tariff Pressures

Like PG, competitors like Colgate-Palmolive Company CL and Church & Dwight Co., Inc. CHD are also working to mitigate tariff headwinds.

Colgate continues to implement pricing actions aimed at offsetting significant cost inflation, currency pressures and tariff-related headwinds. CL highlighted that while tariffs and raw material inflation remain headwinds, it has built flexibility into its business model and sourcing strategies, including productivity initiatives worth $200–$300 million, in the next three years to optimize supply chains, enhance digital capabilities and fund growth investments. Colgate returned $2.1 billion in cash to its shareholders via dividends and share repurchases in the nine months ended Sept. 30, 2025.

Church & Dwight has been grappling with tariffs, elevated input costs and an unfavorable price/mix, all of which are expected to outweigh incremental productivity gains and the benefits from higher-margin acquisitions. However, CHD’s ongoing portfolio streamlining and heightened focus on core brands are helping to reduce its tariff exposure. Additionally, inventory builds and other supply-chain actions have positioned Church & Dwight to manage these tariff pressures more effectively.

PG’s Price Performance, Valuation and Estimates

Procter & Gamble’s shares have lost 16.7% year to date compared with the industry’s 13.9% drop.

From a valuation standpoint, PG trades at a forward price-to-earnings ratio of 19.42X compared with the industry’s average of 17.58X.

The Zacks Consensus Estimate for PG’s fiscal 2026 and fiscal 2027 EPS reflects year-over-year growth of 2.6% and 5.5%, respectively. The company’s EPS estimate for fiscal 2026 and fiscal 2027 has been stable in the past 30 days.

Procter & Gamble carries a Zacks Rank #3 (Hold). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want 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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research