Procter & Gamble has long been considered a defensive stock—the kind of company that sells products people need regardless of economic conditions. Tide detergent, Pampers diapers, Gillette razors, Crest toothpaste. These aren't discretionary purchases. They're household necessities that generate steady, predictable revenue through good times and bad.

But when P&G releases fiscal second quarter 2026 results on January 22, the consumer staples giant faces questions about whether that defensive moat remains intact. The stock has underperformed the S&P 500 by nearly 30 percentage points over the past year, and analysts warn that Q2 results may reveal cracks in the company's pricing power.

What the Street Expects

Consensus estimates for fiscal Q2 2026 (October-December 2025):

  • Earnings per share: $1.87 (vs. $1.88 in the year-ago quarter, -0.5%)
  • Revenue: $22.36 billion (vs. $21.95 billion, +1.9%)
  • Organic sales growth: Approximately 2%

These numbers represent a notable deceleration from P&G's recent pace. The company has beaten or matched consensus estimates in each of the last four quarters, but the margin for error is shrinking as pricing-driven growth gives way to volume-dependent performance.

The Pricing Power Problem

For the past three years, P&G—like most consumer goods companies—has relied heavily on price increases to drive revenue growth. Between 2022 and 2024, the company raised prices across most product categories, sometimes multiple times per year. Consumers grumbled but largely kept buying.

That playbook has run its course. With inflation moderating and competition intensifying from private-label brands, P&G has limited ability to push prices higher. In some categories, the company has actually reduced prices or increased promotional activity to defend market share.

The challenge is that organic volume growth has been modest at best. If P&G can't raise prices and can't grow volumes meaningfully, revenue growth stalls—and that's essentially what analysts expect for Q2.

Category Dynamics

Fabric and Home Care

P&G's largest segment, including Tide, Downy, and Febreze, faces intense competition from private-label detergents that have improved significantly in quality. Unit sales in the laundry category have been flat to slightly negative, and promotional pressure is increasing.

Baby, Feminine, and Family Care

Pampers faces demographic headwinds as birth rates remain depressed in key markets. The diaper category is highly competitive, with store brands gaining share. Feminine care has been more resilient, but growth is modest.

Beauty

The SK-II premium skincare brand, once a growth driver, has struggled with reduced travel retail in Asia and changing consumer preferences. Olay and other mass beauty brands face competition from both premium and value alternatives.

Grooming

Gillette has lost significant market share over the past decade to subscription services and lower-cost competitors. While the brand remains profitable, it's no longer the growth engine it once was.

Health Care

Oral care (Crest, Oral-B) and personal health care products have been relative bright spots, with steady if unspectacular growth. This segment may provide some offset to weakness elsewhere.

The Stock's Underperformance

P&G shares have declined nearly 15% over the past year while the S&P 500 has gained 14.8%—a roughly 30-percentage-point underperformance. The Consumer Staples Select Sector ETF has declined only 1.8% over the same period, meaning P&G has also lagged its defensive peers.

Several factors have weighed on the stock:

  • Growth deceleration: Revenue growth slowing from high single digits to low single digits
  • Margin pressure: Input costs remain elevated even as pricing power fades
  • Multiple compression: Investors have rotated from defensive stocks to growth names
  • China weakness: Economic challenges in P&G's second-largest market have hurt results

Full-Year Guidance

P&G has guided to full-year fiscal 2026 EPS of $6.83 to $7.10, implying earnings growth of flat to 4%. The midpoint of guidance suggests relatively muted expectations.

For the full year, analysts project EPS of $6.99, up 2.3% from fiscal 2025's $6.83. That's a far cry from the double-digit earnings growth that characterized P&G's pandemic-era performance.

What Could Go Right

Despite the challenging setup, P&G has several potential positive catalysts:

Innovation Pipeline

P&G invests heavily in product innovation, and new products can drive premium pricing and volume growth. Recent launches in fabric care and beauty have shown promise.

Emerging Markets

While China has been weak, other emerging markets continue to offer growth opportunities as consumers trade up to premium brands.

Cost Savings

The company's ongoing productivity programs continue to generate cost savings that can offset input inflation and support margins.

Dividend Aristocrat Status

P&G has increased its dividend for 68 consecutive years—the second-longest streak among S&P 500 companies. The current 2.5% yield provides a floor for the stock and attracts income-focused investors.

What Could Go Wrong

Risks that could push results below expectations:

  • Private label gains: Store brands continue taking share in multiple categories
  • Consumer trade-down: Economic stress could accelerate switching to lower-priced alternatives
  • Currency headwinds: Dollar strength creates translation drag on overseas earnings
  • Tariff exposure: New tariffs on imported goods could affect input costs

What Investors Should Watch Wednesday

When P&G reports on January 22 at 8:30 a.m. ET, key metrics to monitor:

  • Organic volume growth: Is unit demand stabilizing or continuing to erode?
  • Pricing contribution: How much room remains for additional price increases?
  • China commentary: Is the company's second-largest market recovering?
  • Full-year guidance: Will management reaffirm, raise, or lower expectations?
  • Market share trends: Is P&G gaining or losing ground to competitors?

The Bigger Picture

P&G's Q2 results will provide insight into the broader consumer environment. If even a company selling necessities like diapers and detergent is struggling to grow, it raises questions about consumer resilience more broadly.

For investors, the key question is whether P&G's current challenges are cyclical—and thus temporary—or structural. If pricing power has permanently eroded and volume growth remains elusive, the stock's historical premium multiple may no longer be justified.

January 22 may not answer that question definitively, but it will provide important data points for the debate. In the meantime, P&G reminds investors that even the most defensive companies aren't immune to the economic forces reshaping consumer behavior.