The MoatWide moat

Procter & Gamble (PG) — moat facet

P&G earns about 20% on its capital from products people buy every week, but it has stopped growing faster than its categories.

P&G's moat is wide, and it earns its keep in the ordinary: leading shares in categories people buy every week, and a cost base built to serve them in 180 countries. The company holds more than 60% of global blades and razors, over 35% of fabric care, more than 30% of baby care and nearly 30% of oral care1. It makes its goods in 96 plants2 and turned net sales of $87,032 million into operating income of $19,748 million in fiscal 20263.

Return on invested capital (%)7.4%FY201510.4%FY20175.1%FY201916.3%FY202019.2%FY202219.0%FY202420.5%FY202519.9%FY2026Moat Explorer calculation from SEC EDGAR XBRL; FY2019 Gillette impairment
From 7% to about 20% in a decade.

The best measure of it is return on capital. Return on invested capital, computed from EDGAR, was 19.9% in fiscal 2026, against 7.4% in fiscal 2015 and a 5.1% trough in fiscal 2019 when Gillette was written down4. It has been above 16% every year since fiscal 20205, well over an assumed 7% cost of capital.

Four things support it. Category leadership keeps the customer coming back. Scale and productivity take hundreds of basis points of cost out each year, 180 in gross margin in fiscal 20266. A cheap balance sheet, rated Aa3 and AA-7, funds 70 consecutive dividend increases8. And a decade of portfolio pruning left P&G in the categories where it leads.

What limits it is growth. Organic sales growth fell from 7% in fiscal 2023 to 1% in fiscal 20269, volume has been flat for three years10, and every segment's net earnings fell in fiscal 2026 while every segment's sales rose11. Gillette, the largest purchase, has been written down twice1213.

The earnings record shows the moat's steadiness and its recent limits. Core EPS grew 7% in fiscal 2019, 13% in fiscal 2020, 11% in fiscal 2021, 3% in fiscal 2022, 2% in fiscal 2023, 12% in fiscal 2024, 4% in fiscal 2025 and 1% in fiscal 202614. There was no year of decline, which is what a wide moat buys; there is also no sign yet of a return to the double-digit years.

This is a wide moat that is stable, not widening. The falsifier is return on invested capital: a fall below 15% in a year without a write-down would mean the leadership positions are costing more to hold than they earn.

Moat trajectory: Holding steady

ROIC 19.9% in FY2026; organic growth down to 1%.

The number that tests this moat
Moat Explorer calc
ROIC vs cost of capital
19.9% (FY2026) vs a 7% hurdle

Return on the capital behind the brands; below 15% without a write-down would mean the moat costs more to hold than it earns.

How it's calculated: Operating income x (1 - effective tax rate) divided by average (total assets - current liabilities - cash), from SEC EDGAR XBRL; 7% hurdle assumed.
Source: Moat Explorer ROIC calculation from EDGAR ↗
Aspects of the moat
DIG DEEPER 01
Leading the Categories People Use Every Day
P&G leads most of the everyday categories it has chosen, and in fiscal 2026 it held or grew share in just over half of its fifty biggest markets.
DIG DEEPER 02
Pricing Power, and Where It Ran Out
P&G's brands carried 4% price rises in fiscal 2024 and have managed 1% a year since, so growth has fallen to the pace of its categories.
DIG DEEPER 03
Scale: Plants, Productivity and a Cheap Balance Sheet
P&G's scale takes hundreds of basis points of cost out every year and turns $87 billion of sales into about $16 billion of free cash.
DIG DEEPER 04
The Portfolio P&G Chose
P&G made itself stronger by selling what it did not lead, and has spent seven years living with the one big purchase that disappointed.
References
  1. ReportedThe company holds more than 60% of global blades and razors, over 35% of fabric care, more than 30% of baby care and nearly 30% of oral care.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 7 MD&A: market shares and competitive activity by category. — FY2026 · publ. 4 August 2026 · source ↗
  2. ReportedIt makes its goods in 96 plants and turned net sales of $87,032 million into operating income of $19,748 million in fiscal 2026.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 1 business and Item 2 properties: employees, manufacturing sites, customers, channels, competition and strategy. — FY2026 · publ. 4 August 2026 · source ↗
  3. ReportedIt makes its goods in 96 plants and turned net sales of $87,032 million into operating income of $19,748 million in fiscal 2026.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - consolidated statements of earnings, cash flows and financial position, debt and dividends. — FY2026 · publ. 4 August 2026 · source ↗
  4. Moat Explorer calcReturn on invested capital, computed from EDGAR, was 19.9% in fiscal 2026, against 7.4% in fiscal 2015 and a 5.1% trough in fiscal 2019 when Gillette was written down.
    Moat Explorer calculation from SEC EDGAR XBRL for CIK 80424: return on invested capital 7.4% (FY2015), 9.6% (FY2016), 10.4% (FY2017), 12.3% (FY2018), 5.1% (FY2019, Gillette impairment), 16.3% (FY2020), 19.3% (FY2021), 19.2% (FY2022), 18.9% (FY2023), 19.0% (FY2024), 20.5% (FY2025), 19.9% (FY2026). — FY2015-FY2026 · publ. September 2026 · source ↗
    Method: Operating income x (1 - effective tax rate; 35% default before fiscal 2018 and 21% where pre-tax income is untagged) divided by average (total assets - current liabilities - cash), from SEC EDGAR XBRL using the tools_roic_edgar.py method; after fiscal 2019 the cash tag is CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents. A 7% hurdle is assumed.
  5. Moat Explorer calcIt has been above 16% every year since fiscal 2020, well over an assumed 7% cost of capital.
    Moat Explorer calculation from SEC EDGAR XBRL for CIK 80424: return on invested capital 7.4% (FY2015), 9.6% (FY2016), 10.4% (FY2017), 12.3% (FY2018), 5.1% (FY2019, Gillette impairment), 16.3% (FY2020), 19.3% (FY2021), 19.2% (FY2022), 18.9% (FY2023), 19.0% (FY2024), 20.5% (FY2025), 19.9% (FY2026). — FY2015-FY2026 · publ. September 2026 · source ↗
    Method: Operating income x (1 - effective tax rate; 35% default before fiscal 2018 and 21% where pre-tax income is untagged) divided by average (total assets - current liabilities - cash), from SEC EDGAR XBRL using the tools_roic_edgar.py method; after fiscal 2019 the cash tag is CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents. A 7% hurdle is assumed.
  6. ReportedScale and productivity take hundreds of basis points of cost out each year, 180 in gross margin in fiscal 2026.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 7 MD&A: net sales drivers, organic sales and gross margin bridge. — FY2026 · publ. 4 August 2026 · source ↗
  7. ReportedA cheap balance sheet, rated Aa3 and AA-, funds 70 consecutive dividend increases.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 1A risk factors, Item 5 market information and performance graph, and critical accounting estimates (Gillette brand). — FY2026 · publ. 4 August 2026 · source ↗
  8. ReportedA cheap balance sheet, rated Aa3 and AA-, funds 70 consecutive dividend increases.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - consolidated statements of earnings, cash flows and financial position, debt and dividends. — FY2026 · publ. 4 August 2026 · source ↗
  9. ReportedOrganic sales growth fell from 7% in fiscal 2023 to 1% in fiscal 2026, volume has been flat for three years, and every segment's net earnings fell in fiscal 2026 while every segment's sales rose.
    Procter & Gamble fourth-quarter fiscal 2026 earnings slides, Form 8-K exhibit 99.1 - organic sales and core EPS history, share results and fiscal 2027 guidance assumptions. — Q4 FY2026 · publ. 29 July 2026 · source ↗
  10. ReportedOrganic sales growth fell from 7% in fiscal 2023 to 1% in fiscal 2026, volume has been flat for three years, and every segment's net earnings fell in fiscal 2026 while every segment's sales rose.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 7 MD&A: net sales drivers, organic sales and gross margin bridge. — FY2026 · publ. 4 August 2026 · source ↗
  11. ReportedOrganic sales growth fell from 7% in fiscal 2023 to 1% in fiscal 2026, volume has been flat for three years, and every segment's net earnings fell in fiscal 2026 while every segment's sales rose.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 7 MD&A: net sales drivers, organic sales and gross margin bridge. — FY2026 · publ. 4 August 2026 · source ↗
  12. ReportedGillette, the largest purchase, has been written down twice.
    Procter & Gamble Form 10-K for fiscal 2019 - the $8.3 billion Shave Care impairment, the Merck KGaA over-the-counter acquisition, five-year financial summary, segment shares, Walmart and top-ten customers. — FY2019 · publ. August 2019 · source ↗
  13. ReportedGillette, the largest purchase, has been written down twice.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - consolidated statements of earnings, cash flows and financial position, debt and dividends. — FY2026 · publ. 4 August 2026 · source ↗
  14. ReportedCore EPS grew 7% in fiscal 2019, 13% in fiscal 2020, 11% in fiscal 2021, 3% in fiscal 2022, 2% in fiscal 2023, 12% in fiscal 2024, 4% in fiscal 2025 and 1% in fiscal 2026.
    Procter & Gamble fourth-quarter fiscal 2026 earnings slides, Form 8-K exhibit 99.1 - organic sales and core EPS history, share results and fiscal 2027 guidance assumptions. — Q4 FY2026 · publ. 29 July 2026 · source ↗
Sources
Generated September 26, 2026