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Consumer Staples Company Presentation. Chad Hackett Adam Gale. Consumer Staples Analysis. + Dividends, Dividend yield is higher than S&P 500 - Earnings are declining relative to S&P 500 - Growing economy – Sector performs poorly during growth relative to S&P 500.

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Consumer Staples Company Presentation

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Consumer staples company presentation

Consumer Staples Company Presentation

Chad Hackett

Adam Gale


Consumer staples analysis

Consumer Staples Analysis

  • + Dividends, Dividend yield is higher than S&P 500

  • - Earnings are declining relative to S&P 500

  • - Growing economy – Sector performs poorly during growth relative to S&P 500


Consumer staples composition

Consumer Staples Composition

SIM Companies

  • Procter & Gamble, 4.20% (Household Products)

  • Walgreens, 2.11% (Retail Drugs)

  • Anheuser-Busch, 3.94% (Beverage - Alcoholic)


Procter gamble

Procter & Gamble


Business analysis

Business Analysis

  • Businesses

    • Baby, feminine & family care

    • Fabric & home care

    • Health care

    • Beauty care

    • Food & beverage

  • Main Brands

    • Pampers, Always

    • Tide, Bounty, Downy

    • Crest, Pepto Bismol

    • Cover Girl, Pantene, Herbal Essences

    • Folgers, Pringles


Business demand

Business: Demand

  • Expected EPS for 2005 : $2.59

    • 11% increase from 2004

  • Solid marketing and product innovation skills

  • Established brand recognition both domestic and international

  • Constant demand for P&G products


Business supply

Business: Supply

  • P&G’s growth for the future relies on foreign acquisitions and internal expansion overseas

    • i.e. Wella AG acquisition in 2003

  • India and China remain strong growth drivers

  • Increased business in health and beauty-care by purchasing Clairol


Financial dupont analysis

Financial: DuPont Analysis


Valuation analysis

Valuation Analysis


Valuation analysis1

Valuation Analysis


Recommendation

Recommendation

  • Hold Procter & Gamble.

  • Remaining a strong player in the consumer staples sector

    • Internal growth abroad

    • Foreign market expansion through acquisition

William Proctor – 1837

James Gamble - 1837


Anheuser busch

Anheuser-Busch


Business analysis1

Business Analysis

  • Businesses:

    • Domestic and International Beer

    • Packaging

    • Theme Parks

  • Main Products

    • Budweiser

    • Michelob

    • Busch

    • Natural Light


Business demand1

Business: Demand

  • Consumption is up .8% from 2003

  • International growth has contributed to at least 20% of A-B’s earnings over the past five years

  • Anheuser-Busch and Tsingtao Close China Investment Agreement

    • Increased profits in China by 45%

  • Demographics – Growth of the 21 to 27 year old age group

  • Inelastic demand for alcohol in general


Financial dupont analysis1

Financial: DuPont Analysis


Valuation analysis2

Valuation Analysis


Valuation analysis3

Valuation Analysis


Recommendation1

Recommendation

  • Sell Anheuser-Busch

  • Issues

    • Revenues shrinking from year to year

    • Pre-tax margins at all-time high, but price to sales and price to earnings at median levels

    • Hugely competitive market with Miller, other brewers


Sysco corporation

Sysco Corporation


Business analysis2

Business Analysis

  • Businesses:

    • Food distributor

    • Supply distributor (plates, silverware, etc

  • Main Customers

    • Restaurants

    • Health-care facilities

    • Education facilities


Business demand2

Business: Demand

  • Revenue is increasing from year-to-year

  • Expected increase in the number of people in healthcare facilities

  • Growing economy stimulates consumer spending (dining out)


Financial dupont analysis2

Financial: DuPont Analysis


Valuation analysis4

Valuation Analysis


Valuation analysis5

Valuation Analysis


Recommendation2

Recommendation

  • Buy Sysco Corporation

  • Reasons

    • Growth rate estimates at an all-time high relative to consumer staples sector

    • Price-to-earnings and price-to-sales do not reflect this expectation

    • Certain demand increases via healthcare and increased discretionary consumer spending


Cvs versus walgreen corporation

CVS versus Walgreen Corporation


Cvs versus walgreen business

CVS versus Walgreen Business

  • Walgreen currently largest U.S. Retail Drug Store with 37.5 billion dollars in sales

  • CVS is second with 22.6 billion dollars in sales


Demand

Demand

  • Increased need for prescription drugs as population continues to grow older

  • Continued expansion in opening of new stores for both companies

    • CVS through acquisition (Eckerd from J.C. Penny)


Dupont cvs

Dupont - CVS


Dupont walgreen

Dupont - Walgreen


Valuation cvs versus walgreens

Valuation – CVS versus Walgreens


Recommendation3

Recommendation

  • Sell Walgreen Corporation to acquire CVS

    • More potential for growth in 2005

    • Retail drug market is expanding

    • Large acquisition of Eckerd will be more beneficial in 2005

    • Walgreen Corporation above industry ratios


Questions

Questions


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