Procter & Gamble (PG) stock has long been known as one of the most consistent and reliable safe havens on the market. But today it’s acting more like a struggling social media stock.
P&G shares are down more than 3% in early trading after the company lowered its earnings guidance for both the current quarter and the 2013 fiscal year. The world’s largest consumer-products company with a $165 billion valuation, Procter & Gamble expects its core earnings per share for the current quarter to be between 75 and 79 cents a share – down from the previously expected 79-to-85-cent range. Sales for the quarter are expected to fall between 1% and 2%.
Competition from growing businesses such as Unilever (UL) and Colgate-Palmolive (CL) is part of what’s been eating into P&G’s sales. Each of those companies saw their earnings rise more than 6% last quarter; Procter & Gamble’s earnings increased only 3%. Colgate-Palmolive, in particular, has been expanding rapidly, its stock gaining nearly 13% in the past year.
To make up for the slipping sales, P&G plans to cut 5,700 nonmanufacturing jobs by the end of FY 2013 – a cost savings of about $3 billion. CEO Bob McDonald insisted that short-term headwinds from foreign exchange and policy changes in Venezuela and Argentina were at least partly to blame for Procter & Gamble’s slow April.
Procter & Gamble stock is now down 10% year-to-date – a troubling trend for one of the most consistent stocks on the market. P&G stock is a favorite of income investors, having increased its dividends every year for more than half a century. Plus, with a beta of just 0.33, the stock is one of the lowest-risk investments on the market.
But the first half of 2012 has been a rough stretch for one of the market’s true stalwarts.
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