What Is Volume Growth and Why Should PG Investors Care Right Now?

Understanding Volume: The Real Indicator of Consumer Demand

When analysts talk about volume, they’re referring to the actual quantity of products sold, as opposed to revenue which can be inflated by price increases alone. For Procter & Gamble and peers in the consumer goods sector, volume trends reveal whether companies are winning over consumers through genuine demand or merely masking weakness with higher prices. In the current environment, this distinction has become critical.

Procter & Gamble’s Mixed Picture: Strong Earnings, Weak Volumes

Procter & Gamble Company [PG] reported solid first-quarter fiscal 2026 results, with earnings buoyed by pricing strategies, operational efficiencies and a favorable product mix featuring premium items. On the surface, the numbers look respectable. Yet a concerning undercurrent runs through the narrative: actual consumption volumes are struggling across developed markets, particularly in North America.

The reality on the ground reveals softer category demand as consumers adjust purchasing habits. Despite PG’s pricing actions and promotional efforts, the volume picture remains challenging. Higher prices have accelerated trade-down behavior, with shoppers gravitating toward value alternatives and private-label options. This dynamic signals that relying on pricing to drive top-line growth has natural limits—at some point, consumers simply purchase less.

Management acknowledges this tension, framing volume restoration as essential to long-term durability. The company is betting on product innovation, enhanced digital capabilities and reinvested productivity gains to reignite purchase volumes. Encouraging signs exist in markets like China and portions of Latin America, where demand trajectories appear more resilient, potentially offsetting North American softness.

Church & Dwight and Colgate-Palmolive: Battling the Same Headwinds

Church & Dwight [CHD] and Colgate-Palmolive [CL] face identical structural challenges. Both have maintained operational momentum through disciplined execution and brand strength—CHD’s THERABREATH, HERO and ARM & HAMMER lines continue gaining share, while Colgate leverages science-backed innovation. However, underlying volume metrics tell a less optimistic story.

Church & Dwight’s volume growth remains constrained by selective consumer spending and elevated promotional activity. Colgate confronts even headier pressure, with volume declines concentrated in developed regions, compounded by currency headwinds and persistent consumer rotation toward budget-friendly alternatives. Neither company can indefinitely offset volume weakness through margin expansion and premiumization alone.

Valuation Snapshot: PG Trading at a Premium

Procter & Gamble shares have declined 11.7% over the past six months, underperforming the broader industry’s 13.2% retreat. However, valuation remains elevated: PG trades at a forward price-to-earnings multiple of 19.7X versus the industry average of 17.9X.

Consensus estimates project modest earnings growth ahead. For fiscal 2026 and fiscal 2027, analysts forecast year-over-year EPS expansion of 3.1% and 2.8%, respectively—fairly muted by historical standards. These estimates have held steady over the past week, suggesting limited revisions either direction.

Currently, Procter & Gamble carries a Zacks Rank of #3 (Hold), reflecting the tension between solid execution and volume concerns that plague the near-term outlook.

The Bottom Line: Volume Recovery Is the Real Test

For PG, CHD and CL, the path forward hinges on whether management can reverse volume trends without crushing profitability. Pricing delivered near-term relief, but sustainability requires genuine consumer demand restoration. Investors should closely monitor volume figures in upcoming quarters—these metrics will ultimately determine whether these consumer staples can achieve balanced, durable growth or remain hamstrung by the volume challenge.