Buying stock in Procter & Gamble (NYSE:PG) may be more of a direct reflection of the company's name than many would have previously thought possible. The consumer-products giant still leads the world market, but competition from lower-priced competitors and a still-high jobless rate in the U.S. has it biting its knuckles with worry.
First-quarter profit fell 6.8%, and net profits were $3.08 billion, down from last year's $3.31 billion. On average, the companies products are some of the most expensive on the market, and that has a lot of customers moving down the store aisle in search of a cheaper alternative. And its not just individuals who are looking to save money—many businesses who buy large amounts of things like paper towels and toilet tissue are also trying to cut costs.
However, even with the decrease in sales in the U.S. market, P & G has seen some growth from its presence in Brazil and other foreign markets. But are these markets enough to carry the slump the company is seeing in its home country? Some analysts say no, as the decline was even larger than they had originally forecasted. P & G says the decline was mainly due to its selling off of a pharmaceutical unit, and is still saying that it expects share prices of $1.05 to $1.11 for the second quarter. If those share prices are dependent on employment rates and income levels, then having stock in the company is still going to be a major gamble.
Disclosure: "No positions"