Procter & Gamble Co (NYSE:PG), a consumer products giant, reported its second quarter earnings on Tuesday morning before the bell. The PG earnings report showed that the firm is still struggling with slowing sales growth.

P&G stock used to be an old faithful that investors turned to for dividend income and long-term stability. However, the share price turned in an underwhelming performance in 2017. And a shakeup with the company’s board has many wondering whether or not the firm can turn things around.

The PG earnings report showed that PG stock posted earnings of $1.19 per share, a major jump from the $1.14 that Wall Street had expected and an impressive 10% earnings gain.

New Board, New Procter & Gamble

Despite PG CEO David Taylor and his team’s best efforts to keep him out, activist investor Nelson Peltz was given a seat on P&G’s board after a heated battle that ended with a vote that Peltz narrowly lost. This week’s earnings release was P&G’s first since the proxy vote. As of now, the firm hasn’t given away any clues as to how management is planning to shift its strategy moving forward.

Peltz won’t take his seat until March, but management is likely already tweaking its strategy before he joins the conversation. Activist investors like Peltz often call for risky moves like breaking down the firm or taking on new debt. So far, P&G execs have expressed their commitment to avoiding such initiatives.

Those kinds of big moves are what shareholders asked for when so many of them voted for Peltz to be a part of the board, however. This means management will need to produce a future plan that will help the firm continue to deliver value and growth for the business — especially in light of PG earnings this quarter.

Despite the earnings beat, the firm still appears to be struggling with sluggish sales growth and lost market share. Although the results weren’t dire, they didn’t give investors confidence that P&G can continue on its current path. 

PG Earnings Report Shows Continued Struggle For Market Share

A big part of the reason shareholders have been unhappy with Procter & Gamble stock has been declining market share. Last year, the company cut prices on some of its high-margin goods in what most believe was an attempt to grab back a larger slice of the pie. In the last PG earnings report, investors were disappointed to see sales growth slow.

This quarter, total net sales rose to $17.4 billion — compared to the $17.39 billion that many were expecting.

While sales in P&G’s beauty and healthcare segments rose 9% and 4% respectively, other segments like grooming failed to impress. This was a worrying trend as PG implemented an up to 20% price cut on its Gillette shaving products — part of its grooming arm. The promotional pricing contributed to the 3% decline in the segment.

The silver lining, however, was that net sales of the grooming business lost 5% in Q1. So at least the firm appears to be moving in the right direction.

Tide Pod Dilemma

This year P&G was the subject of an unfortunate internet trend in which teenagers eat Tide laundry pods. The firm has been working to quash the challenge.  PG put out public service announcements warning against ingesting the laundry pods and worked with social media outlets to stop the spread of the videos.

With that said, PG stock would certainly hurt if one of the teens taking part in this challenge were seriously injured by the pods. So, although the firm has come out saying that there’s only so much you can do to combat poor judgement, it’s still a factor weighing on analysts’ minds.

Tax Impact

This earnings season, tax implications have been in the spotlight.  Investors are eager to see how the Trump administration’s new corporate tax structure affects the market.

P&G took a provisional charge of $628 million this quarter due to the new tax code, and the firm said the new law has given the company a $135 million leg up. That benefit is expected to continue through fiscal 2018 and increase further in the years to come.

The Bottom Line On PG Earnings

This quarter’s results were OK — but not stellar.

It’s clear that Procter & Gamble need to take more drastic actions to improve the business and maximize shareholder value.

The upcoming addition of Peltz to the board will likely to take the stock higher as he pushes for bigger moves that will help the company win over customers who’ve abandoned P&G brands.

As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.