The first half of 2017 is in the books, and Procter & Gamble (NYSE:PG) shareholders are running just behind the market so far. Their stock rose less than 4% over the first six months of the year, compared to a 7% boost for the Dow Jones Industrial Average.

Let's look at the main reasons Wall Street isn't jazzed about P&G's performance lately -- and whether the consumer goods titan can turn things around in the back half of the year.

A woman shops for cleaning supplies.

Image source: Getty Images.

Two very different quarters

The company started the year off on a strong note. Organic sales growth came in at 2% in its fiscal second quarter to edge past management's expectations. That figure was driven by a broad, healthy mix of volume and pricing gains across P&G's five main business segments, too. Even the grooming division -- home to the Gillette razor blade franchise -- showed encouraging sales gains. "We delivered good results in a difficult operating environment," CEO David Taylor said in a press release in late January as P&G raised its full-year sales outlook to 2.5% at the midpoint of guidance from 2%.

That positive momentum didn't last long, though. In its fiscal third-quarter report in late April, P&G announced surprisingly weak sales, with the grooming segment suffering especially bad losses. The division posted a 6% slump in organic revenue thanks to falling prices and a move toward cheaper disposable blades. Overall, the company's volume rose by just 1% as pricing held flat.

PG Chart

Data through the first six months of 2017. PG data by YCharts.

Taylor and his team blamed a weakening industry as the key driver behind the growth reversal. "The third quarter macro environment was characterized by a slowdown in market growth, continued geopolitical disruptions and foreign exchange challenges," he told investors. The good news for shareholders is that P&G fared better than rival Kimberly-Clark (NYSE:KMB), which announced a 1% drop in organic sales in its most recent quarter. Kimberly-Clark, the main global challenger to P&G's Pampers franchise, lowered its full-year growth outlook to below 2% as its core U.S. market slowed to a crawl.

Can P&G turn the corner?

P&G's more diverse sales base should help it deliver slightly faster growth than Kimberly-Clark in 2017. Yet the full-year number that investors will see in early August is expected to be closer to the 2% uptick that management originally targeted than the 2.5% boost executives forecast in January.

P&G logo.

Image source: P&G.

Through all the growth struggles, the improvement in P&G's finances hasn't missed a beat. Thanks to a combination of aggressive cost cuts, efficiency gains, and a portfolio reboot, operating margin is up above 20% of sales, leaving Kimberly-Clark and most other rivals far behind. P&G also in April raised its outlook for free cash flow productivity to 95%. That would mark the third straight fiscal year of outperformance in this key metric.

The financing wins are making it easier for P&G to increase direct returns to shareholders, both through faster dividend growth and ramped-up stock repurchase spending. It hiked its dividend by 3% this year for a nice boost over last year's 1% uptick. Overall, P&G plans to deliver a whopping $22 billion to shareholders in the fiscal year that ends in August.

That excess cash would be more useful to investors if the company can use a chunk of it to help return its portfolio to market-beating sales growth. To that end, P&G is currently increasing investments in marketing and innovation.

But the stock isn't likely to spike without evidence of accelerating organic revenue gains. That's why investors will be keeping a close eye on the company's sales outlook for 2018 when it closes its fiscal 2017 books on Aug. 2.

Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.