Procter & Gamble Returns to the Dow’s Cellar

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Consumer products maker Procter & Gamble Co. (NYSE: PG) dropped the best part of two percentage points last week to go into the weekend as the worst-performing Dow Jones industrial average stock of 2018. Shares dropped 1.8% last week, and for the year to date, the stock is down 10.9%.

The second-worst Dow stock so far this year is Caterpillar Inc. (NYSE: CAT), which is down 10.3%. That is followed by 3M Co. (NYSE: MMM), down 9.7%, Chevron Corp. (NYSE: CVX), down 8.5%, and Goldman Sachs Group Inc. (NYSE: GS), down 8.2%. Of the 30 Dow stocks, 14 are showing a loss to date in 2018.

The blue-chip index dropped 38.28 points last week to close at 25,964.82, down about 0.2% compared to the previous Friday’s close. For the third quarter to date, the Dow is up 7.2%, better than the S&P 500 (up 5.8%) and the Nasdaq Composite (up 5.3%). For the year to date, the index is up 4.4%, trailing both the S&P 500 (up 6.5%) and the Nasdaq Composite (up 12.8%).

At the Barclays Global Consumer Staples Conference last week, P&G’s chief financial officer, Jon Moeller, indicated that the company remains in acquisition mode, including a move into the over-the-counter health care business. Moeller commented:

OTC healthcare [is] very attractive from a margin standpoint, from a growth standpoint, from a demographic standpoint, from a policy standpoint, and we’ll look at all tools available to continue to increase our presence in that space. … [T]here is a relative lack of true consumer brand-building acumen that’s brought to bear on many of these assets. And there’s also a distinct go-to-market advantage as health care consumption moves in some cases out of the prescription space into the OTC space …

More acquisitions mean more spending, and Moeller’s comments apparently influenced some investors to look for the exits. Shares opened Thursday at $82.91 and had lost a dollar by Friday’s closing bell.

P&G stock closed at $81.91 on Friday, down about 0.9% for the day, in a 52-week range of $70.73 to $94.67. The 12-month consensus price target on the stock is $83.08, and the forward price-to-earnings ratio is 17.39.