Has The Procter & Gamble Company (PG) Become the Perfect Stock?

For years, Procter & Gamble treaded water even as its consumer-goods peers saw substantial improvements. In particular, Unilever plc (ADR) (NYSE:UL) and Kimberly Clark Corp (NYSE:KMB) focused strongly on emerging markets to try to drive growth, and they did a better job than P&G of capturing revenue growth. Kimberly-Clark is smaller and therefore might be expected to grow more quickly, but with Unilever being comparable in size, P&G’s failure to match up is more troubling.

Now, though, the stage appears set for a wave of new innovation from P&G. Its new Tide Pods product has performed well lately, leading the company to introduce it to other markets. With one success under its belt, P&G’s new-product teams should gain confidence as they make new attempts to add to the company’s prestigious list of billion-dollar brands.

Unfortunately, P&G took a big hit earlier this week when Venezuela devalued its currency. The company held what had been worth $1.3 billion in local Venezuelan currency and therefore will take a charge of as much as $275 million to reflect the devaluation, cutting core earnings by a penny per share this quarter and $0.03 per share for full-year 2013. The Clorox Company (NYSE:CLX) had already warned that a potential devaluation could take $0.05 to $0.10 per share off its full-year earnings, highlighting the risk that all global players face in consumer goods.

For P&G to improve, it needs to keep pushing its earnings higher to bring its valuation down to more manageable levels. If new product launches go well, then higher sales could also get P&G closer to perfection.

The article Has Procter & Gamble Become the Perfect Stock? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Kimberly-Clark, Procter & Gamble, and Unilever.

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