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Consumer Staples Company Presentation

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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  1. Consumer Staples Company Presentation Chad Hackett Adam Gale

  2. 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

  3. Consumer Staples Composition SIM Companies • Procter & Gamble, 4.20% (Household Products) • Walgreens, 2.11% (Retail Drugs) • Anheuser-Busch, 3.94% (Beverage - Alcoholic)

  4. Procter & Gamble

  5. 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

  6. 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

  7. 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

  8. Financial: DuPont Analysis

  9. Valuation Analysis

  10. Valuation Analysis

  11. 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

  12. Anheuser-Busch

  13. Business Analysis • Businesses: • Domestic and International Beer • Packaging • Theme Parks • Main Products • Budweiser • Michelob • Busch • Natural Light

  14. 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

  15. Financial: DuPont Analysis

  16. Valuation Analysis

  17. Valuation Analysis

  18. 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

  19. Sysco Corporation

  20. Business Analysis • Businesses: • Food distributor • Supply distributor (plates, silverware, etc • Main Customers • Restaurants • Health-care facilities • Education facilities

  21. 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)

  22. Financial: DuPont Analysis

  23. Valuation Analysis

  24. Valuation Analysis

  25. 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

  26. CVS versus Walgreen Corporation

  27. 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

  28. 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)

  29. Dupont - CVS

  30. Dupont - Walgreen

  31. Valuation – CVS versus Walgreens

  32. 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

  33. Questions

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