Procter & Gamble (NYSE:PG) is buying its way into wellness. On August 4, L Catterton announced it had signed a definitive agreement to sell Thorne, a science-backed health and wellness brand, to Procter & Gamble for $3.8 billion in cash. The deal lands a day after an August 3 analysis flagged a fiscal 2027 earnings guide that came in below expectations, weighed down by roughly $1 billion in new cost headwinds. Investors now have two stories to weigh at once: fresh expansion and a tougher near-term cost picture.
Bull Case: A Bigger Foothold In Trusted Wellness
The Thorne acquisition gives Procter & Gamble entry into a category built on clinical credibility rather than shelf space. Thorne has spent 40 years building relationships with healthcare practitioners, and L Catterton’s announcement noted the company developed a proprietary AI wellness advisor to help consumers navigate its supplement lineup, a tool practitioners can point their patients to directly.
The transaction is expected to close in the fourth quarter of 2026, an all-cash deal with no debt or equity swapped into the mix. Procter & Gamble isn’t skimping on shareholders while it shops, either. The company returned $10.2 billion in dividends and $5.0 billion in share repurchases during fiscal 2026, and it plans roughly the same combination, about $10 billion in dividends and $5 billion in buybacks, for fiscal 2027. There’s a case buried inside the company’s own guidance, too. Strip out the roughly $1 billion in commodity, energy, and transportation costs management expects to absorb next year, and core EPS would be growing at about 10% instead of the 0% to 3% baked into the outlook.
Bear Case: Guidance That Undercuts The Story
The numbers behind the fiscal 2027 outlook explain the caution. Management guided core EPS to $6.89 to $7.11, implying growth of just 0% to 3%, and pointed to roughly $1 billion in after-tax commodity, energy, and transportation costs as the main culprit. Add higher net interest expense, lower non-operating income, and unfavorable currency, and the total drag reaches $0.56 per share, wiping out about 8 percentage points of core earnings growth before the year even starts.
The trend already shows up in recent results. In the fiscal fourth quarter, net sales rose 2% year-over-year to $21.2 billion while organic sales were flat, and core EPS fell 3% to $1.43. For the full fiscal year, net sales grew 3% to $87.0 billion, but organic sales rose only 1%, and every bit of that growth came from higher prices rather than more units sold. Volume and mix didn’t move. Shares trade near $144, about 5% above their 52-week low of $137.62, or roughly 21 times fiscal 2026 core earnings of $6.89. That’s not an expensive multiple, but it isn’t cheap for a business guiding to low-single-digit growth.
What The Market Is Signaling
Hedge fund ownership of Procter & Gamble fell from 90 funds to 78 in the most recent quarter, pointing to some institutional trimming. Short interest sits at just 0.99% of float, a level that shows almost no organized bet against the stock. The forward price-to-earnings ratio of 20.83, as of August 7, is a moderate multiple for a company guiding to 0% to 3% core earnings growth. Falling fund ownership alongside such thin short interest is an unusual pairing, since the skepticism here isn’t showing up as a short bet.
Two Timelines, One Stock
Procter & Gamble is making a long-term bet on wellness while absorbing a near-term cost squeeze, and both are true at once. For the bull case to play out, Thorne needs to become more than a bolt-on, extending the company’s reach into a category growing faster than laundry detergent and diapers. The $3.8 billion price tag on Thorne shows Procter & Gamble is willing to spend for that future even as fiscal 2027 asks investors to be patient.
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