The tide has certainly turned against

Procter & Gamble

(PG) - Get Report

. But has it crested?

The company warned before the stock market opened Tuesday that it wouldn't meet sales and earnings projections for its third quarter and fiscal year. The maker of Tide and Crest, leaning toward macroeconomic fuzziness, blamed raw-material costs and pricing pressure.

Analysts and shareholders were livid: Wall Street firms downgraded P&G en masse, and investors, questioning management's credibility, knocked the stock down a massive 31% to 60. Other consumer-product stocks also were hit hard, including rival toothpaste giant

Colgate

(CL) - Get Report

, which slid 11% on the heels of a related downgrade even though it insisted Tuesday that it would meet first-quarter earnings expectations.

The Gamble

Followers of Procter & Gamble say they won't be fooled again. "We are concerned with management credibility, given that management assured us that this would absolutely not happen again," wrote Carol Warner Wilke, an analyst at

Credit Suisse First Boston

, who downgraded P&G to hold from buy in the wake of the news. "Yet the same promise was made last year when numbers were talked down in the third quarter." First Boston hasn't underwritten for Cincinnati-based P&G.

Ebb Tide
Tough day for P&G shareholders

Source: BigCharts

The analysts' comments were borne out in the magnitude of the market's reaction, which is particularly unusual in light of P&G stock's relative languor over the last few years. Single-day 30% drops tend to be reserved for stocks that the market has pinned high hopes on, but P&G hasn't been a highflier for some time.

Some observers saw the reaction as signaling Wall Street's continuing focus on revenue growth, in companies both Old Economy and New. "I think what happened is the company was driving very hard for the top line because that's what the Street wanted," says John Maxwell, an analyst who follows the company at

Waddell & Reed

, which owns P&G shares. "Basically, they underestimated the budget that was going to require."

Hard Work

Meanwhile, P&G CFO Clayton Daly Jr. said Tuesday that the company would work hard to regain investor confidence by delivering solid growth.

"We are obviously very unhappy about taking guidance down, but we intend to take it down only once," Daly said of the earnings guidance.

Not everyone was irate. For one thing, some investors believe that a further retreat in these stocks is all but inevitable, considering the rising interest-rate environment, among other factors.

"Management is doing exactly what they should be doing," says Marion Schultheis, a managing director at

J&W Seligman

who is neutral in P&G compared to her benchmark.

"I think other companies will have similar problems throughout the year," Schultheis continues. "We're starting to see inflation creeping up, and P&G is just the first to announce it."