Procter & Gamble on Tuesday reported a messy fiscal fourth quarter, putting shares of the Tide detergent and Pampers maker on pace for their worst day in two years. The stock is understandably down, but this is not a thesis-changing report. Revenue in three months ended June 30 totaled $20.53 billion, missing Wall Street expectations of $20.74 billion, according to estimates compiled by LSEG. Sales were essentially flat year over year. Adjusted earnings per share (EPS) rose 2% on an annual basis to $1.40, topping estimates by 3 cents, LSEG data showed. Procter & Gamble Why we own it : We like P & G because demand for its household and personal care products does not tend to fluctuate based on the economy. It has effectively navigated high inflation over the past two years. It’s the kind of defensive stock that is good to own while the economy slows. Competitors : Colgate-Palmolive and Unilever Weight in Club portfolio : 2.35% Most recent buy : April 3, 2024 Initiated : April 7, 2022 Bottom line It’s not surprising that shares of Procter & Gamble are lower after reporting a mixed quarter with guidance for its fiscal 2025 that merely met expectations — especially considering the stock closed Monday at a record high of $169.93. But the magnitude of Tuesday’s declines, down about 6%, is excessive. Nothing in Tuesday’s report suggests that P & G — a well-run company with a consistent track record of shareholder returns and earnings growth — is straying from its long-term course. Some of P & G’s slide may simply be that investors are looking for more exciting stories at this point in the economic and interest-rate cycle. With the Federal Reserve widely expected to cut rates at its September meeting, a buzzier story looks like fellow Club holding Stanley Black & Decker , up nearly 8% on the back of its earnings report Tuesday. “I don’t want you to outthink it: Procter is a much better company than 99% of the companies you could buy today,” Jim Cramer said on Tuesday’s Morning Meeting. “But you don’t buy consistency at this point in the cycle. You buy possible explosive earnings [like] Stanley Black & Decker.” Investors may also be worried that P & G could struggle to meet its guidance if consumer spending in the U.S. and Western Europe weakens in the coming quarters. On the call, management sounded upbeat on the current state of the consumer, saying that private-label market share in North America and Europe remains in line with pre-pandemic levels, and noting that its products are essential everyday items that people need no matter the economic conditions. Despite that, P & G had a spotty quarter, which could give fuel to investors worried that a deterioration in the consumer would make its guidance harder to achieve. Nevertheless, P & G still fills an important role in a diversified portfolio, and its business is on solid footing. Consider this: The vast majority of P & G’s portfolio — executives identified it as 85% — is performing in…
Read More: P&G stock deserves to be down after a messy quarter — but not this much