Image source: Getty Images.

Procter & Gamble (NYSE:PG) has a simple but effective formula for producing awesome long-term shareholder returns. The consumer goods titan aims to:

  1. Grow sales at a faster pace than the markets in which it competes
  2. Generate mounds of cash from that expansion
  3. Deliver higher earnings, thanks to world-class profitability

P&G hasn't managed this trifecta in either of the last two fiscal years, as market share declined and a portfolio reboot sapped resources. The good news is that sales momentum is improving, and management is forecasting more gains ahead. However, the company could easily see a further deterioration of its business. Below, I'll highlight a few factors that might trip up the stock in 2017.

Sluggish market

The global market for premium, branded consumer goods is getting weaker lately. In fact, P&G recently warned investors that growth rates softened in some of its biggest markets at the start of fiscal 2017. This sluggishness could combine with geopolitical volatility and foreign currency swings to derail its hopes for a sales growth turnaround.

Rivals are already feeling the pinch from lackluster markets. Unilever (NYSE:UL) just posted its first sales volume decline in over a year, which management blamed on slowing demand and challenges like currency devaluations that are pushing up the cost of living for consumers in places like Latin America.

Likewise, Kimberly-Clark (NYSE:KMB) complained about a "challenging economic and competitive environment" that kept sales growth flat in the most recent quarter, down from a 3% growth pace in the prior quarter. None of these consumer goods giants predict an industry uptick anytime soon, and that points to weaker earnings overall, as they all fight to undercut each other on pricing for the sake of protecting market share.

Less brand firepower

The year ahead will tell investors a lot about whether management blundered in selling off roughly 100 of its brands over the last two years. The divestments (including huge franchises like Duracell batteries and Coty beauty products) raised almost $10 billion of cash, funds that the company has been using to shower shareholders with direct returns to help ease the sting of decreasing profits.

CEO David Taylor and his team believe that the new, smaller Procter & Gamble will be easier to manage, with a faster overall growth pace and higher profit margins. If those benefits don't materialize, though, the company could quickly find itself in the same slow-growth situation it faced in 2013. But this time, P&G won't have the option of selling off another big slice of itself to preserve shareholder returns. Simplification helps the business, but cutting can only take P&G so far before executives need to produce the market share growth that they've been targeting for years.

Image source: P&G investor presentation.

For the full fiscal year ahead, Procter & Gamble is predicting an improvement in its organic growth pace to 2% from the past year's 1%. Hitting that number might still mean the company loses market share to rivals like Unilever and Kimberly-Clark, although at a smaller rate.

Even if P&G falls short of its goal, though, shareholders should do relatively well, thanks to financial successes like bringing down costs and infrastructure efficiency gains. The company's 60-year dividend growth streak, for example, isn't in jeopardy even if the pace of payout hikes ends up disappointing income investors.

Thus, the worst-case scenario for shareholders likely involves another year of weak sales growth offset by hefty cash returns as P&G loses a bit more relevance with consumers while still growing profits at a healthy clip.