PG

We rate PROCTER & GAMBLE Co (PG) as a Hold with a composite score of 60.8/100 at a current price of $165.02. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in stability (97th percentile) and value (71th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Narrow Moat rating (51/100), Medium uncertainty, and Exemplary capital allocation.

Key items to watch: balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

PROCTER & GAMBLE Co holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 60.8/100 places it at rank #615 in our full 7,333-stock universe. As a mega-cap company with a $332.5B market capitalization, PROCTER & GAMBLE Co benefits from significant scale, distribution networks, and brand recognition that smaller competitors cannot easily replicate.

Revenue is growing at 2%, though momentum at the 42th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 51% (+9.0pp vs sector) narrow to operating margins of 25% (+23.6pp vs sector) and net margins of 20.3%, yielding a gross-to-net conversion rate of 39%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $165.02, PROCTER & GAMBLE Co appears undervalued relative to its fundamentals. Our value factor score of 71/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 21.3x (roughly in line with the sector median of 22.3x), EV/EBITDA of 17.4x (at a premium), P/B of 7.0x, P/S of 4.3x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Medium uncertainty rating to PROCTER & GAMBLE Co. The stock presents a balanced risk profile: significant leverage (139% debt-to-equity) and low beta of 0.12 — while defensive, this may indicate limited upside participation in bull markets. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (139% debt-to-equity); low beta of 0.12 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 97th percentile and quality factor at the 69th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 51% provide a buffer against cost pressures; above-average stability (97th percentile) suggests predictable business dynamics; large-cap scale ($332.5B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate PROCTER & GAMBLE Co's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 32.9%, a 2.94% dividend yield, best-in-class net margins of 20.3%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — PROCTER & GAMBLE Co meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 2.94% dividend yield, and the combination of 13.8% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, PROCTER & GAMBLE Co receives a Hold rating with a composite score of 60.8/100 (rank #615 of 7,333). Our quantitative framework assigns a Narrow Moat (51/100, trend: stable), Medium uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 64/100.

Our analysis supports a neutral stance on PROCTER & GAMBLE Co. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.