In recent months, Procter & Gamble (PG) has not exactly been the sort of “defensive” stock that is resilient during market downturns, suggests Chuck Carlson, dividend reinvestment specialist and editor of DRIP Investor.

After putting up disappointing profits in the June quarter, the stock has slumped 9% over the last three months versus the 4% decline in the S&P 500. Because of the stock’s relative weakness, I was especially interested to see how the shares would react to its latest quarterly profits.

Well, the fiscal 2023 first-quarter profits are out, and the stock has been, well, sleepy. Indeed, while these shares are off their recent lows, the latest earnings have not exactly catapulted these shares to higher levels. The company did manage to post earnings that beat the consensus estimate.

But the strong dollar erased much of the sales gain. While organic sales grew by a healthy 7%, net sales when considering currency movements rose just 1%. Organic sales growth was recorded in each of the company’s operating segments, although organic volume was down in all but Grooming.

Price increases helped offset the volume declines. For fiscal 2023 overall, the firm is expecting organic sales growth in the 3% to 5% range, implying some slowdown as the year progresses.

Overall, I thought it was a decent quarter. And I typically do not give too much weight to currency influences on results since these can reverse themselves quickly. Pricing remains favorable, but it will be interesting to see if Procter & Gamble can maintain pricing power should economic conditions deteriorate significantly and consumers start to trade down to generics and private brands.

P&G stock trades for around 22 times expected fiscal 2023 earnings, so it is still a tough call to label these shares as “cheap.” The price decline has boosted the dividend yield to nearly 3%, which should provide some support to the stock. While it is possible P&G stock will be mired in a trading range for the remainder of the year, I still like the stock’s total-return potential over the long term.

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