Can PG's Productivity Drive Fuel EPS Gains Amid Inflation?

With inflationary pressures lingering across raw materials, logistics and labor, The Procter & Gamble Company PG is increasingly relying on productivity as a core earnings growth lever. Rather than depending solely on pricing, the company has ramped up cost savings, supply-chain efficiencies and organizational simplification to protect profitability. This productivity-driven approach is designed not only to offset inflation but also to create headroom for reinvestment in innovation and brand support, key pillars of PG’s long-term growth strategy.

Procter & Gamble’s productivity drive spans manufacturing optimization, procurement efficiencies and structural cost reductions, including its multi-year cost savings program. These initiatives have helped stabilize operating margins and support EPS growth even as input costs remain elevated. By simplifying product portfolios, improving demand forecasting and leveraging scale across its global supply chain, PG is converting efficiency gains directly into earnings resilience. Management has emphasized that these savings are largely structural, suggesting it can provide ongoing EPS support rather than one-time relief.

The critical test, however, is sustainability. Productivity can buffer inflation and support EPS in the near term, but long-term earnings growth still depends on volume recovery and successful innovation. If PG continues to translate efficiency gains into targeted reinvestment while avoiding cuts that impair execution, its productivity engine could remain a durable EPS driver. In an environment where pricing power is normalizing, Procter & Gamble’s ability to self-fund growth through productivity may prove decisive in sustaining earnings momentum amid persistent cost pressures.

How CHD & CL Use Productivity to Defend EPS Amid Inflation

As inflation, currency volatility and input cost pressures persist, Church & Dwight CHD and Colgate-Palmolive CL are also increasingly relying on productivity-driven efficiency gains to protect earnings and sustain EPS growth.

Church & Dwight is using productivity as a key device to protect earnings and support EPS growth amid ongoing inflation and tariff pressure. Manufacturing efficiencies, supply-chain optimization and disciplined cost control have enabled the company to expand adjusted gross margin while continuing to invest in its brands. These productivity gains help offset higher input costs and fund marketing and innovation across core franchises such as ARM & HAMMER, THERABREATH and HERO. As pricing normalizes, CHD’s ability to self-fund growth through efficiency remains central to sustaining EPS momentum.

Colgate heavily depends on productivity programs like Funding-the-Growth to offset inflation and currency headwinds while supporting EPS stability. Cost savings from procurement, supply-chain efficiencies and organizational simplification are helping absorb pressure from higher raw material costs and softer volumes. Management is reinvesting these efficiencies into brand building and premium innovation to support longer-term growth. While productivity is cushioning near-term earnings, the durability of EPS gains will depend on CL’s success in translating efficiency into renewed volume growth.

PG’s Price Performance, Valuation & Estimates

Procter & Gamble’s shares have lost around 6.7% in the past six months compared with the industry’s 8.4% decline.

From a valuation standpoint, PG trades at a forward price-to-earnings ratio of 20.17X compared with the industry’s average of 18.19X.

The Zacks Consensus Estimate for PG’s fiscal 2026 and 2027 EPS indicates year-over-year growth of 2.1% and 5%, respectively. The company’s EPS estimates for fiscal 2026 and 2027 have moved southward in the past seven days.

Procter & Gamble currently carries a Zacks Rank #4 (Sell). 

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

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

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