Dow’s Worst Performing Stock Still Procter & Gamble

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Procter & Gamble Co. (NYSE: PG) posted a share price loss of just 0.5%, enough to maintain its rank as the worst-performing Dow Jones industrial stock of the year to date. So far in 2018, the shares have lost 21.2%.

The second-worst Dow stock so far this year is General Electric Co. (NYSE: GE), which is down 19.2%. That is followed by 3M Co. (NYSE: MMM), down 15.3%, Walmart Inc. (NYSE: WMT), down 11.4%, and Johnson & Johnson (NYSE: JNJ), down 11.1%.

The Dow Jones industrial average index dropped less than 50 points over the course of the past week to close at 24,262.51, down 0.2% for the week. For the year to date, the telecom sector has dropped nearly 12%, the worst among the 10 market sectors.

P&G has yet to recover from the beating the stock took when it announced first-quarter earnings a couple of weeks ago. The results beat estimates, but the company’s announced deal to pay $4.2 billion for Merck KGaA’s consumer health unit was — and remains — too much for investors to swallow.

Last week’s report on inflation also is not especially good for consumer products companies like P&G. Yes, wages are rising at a slightly faster pace than prices, but consumers generally do not want to spend these modest amounts on staples. Many consumers will use the small increases attributed to inflation and the Trump tax cuts to pay down debt and others to buy a milkshake instead of a soft drink at their next outing to a fast-food joint.

The second problem with raising prices is that competition is heating up, especially from online retailers offering the same or similar products for less. Consumers may be loyal to the brand, but they are less likely to be loyal to paying full price for it if they can get it cheaper somewhere else. P&G has to figure out a way to make money in this changed environment because it is the new normal.

Procter & Gamble stock closed at $72.43 on Friday, up about 1.5% for the day, in a 52-week trading range of $70.73 to $94.67. That low was posted Wednesday. The 12-month consensus price target on the stock is $81.79, unchanged from the prior week, and the forward price-to-earnings ratio is 16.20.