Sector financial performance:

This company, which is primarily a manufacturer and marketer of consumer household and personal care products, has been grouped into household goods sector in household goods& service industry.

It seems that there has been a growing demand from US market for household goods and personal care products. This has been reflected by the continuingly increasing sale volume since 2014 (annual average growth rate of 4%). In addition, demand has grown faster pace in international market.

However, we have seen an increasing pressure on price as a result of competition among brands and of unfavourable climate in retail industry. And this has been reflected by the decreasing selling price or product mix’s shifting to power price products.

As a result of lower products costs (material costs) and increased sales, the typical companies’ gross margin has gone up to about 45% in 2017 and the typical operating margin up to about 19% with a SG&A as percentage of sales of about 25%.

The typical average stock Price/cash flow ratio is: 27(interest/EBI ratio of 11%) and stock price/sales ratio is about 3.

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Company performance:

It seems that the demand for products of this company in the past several years has been strong and growing as indicated by the continuingly increasing sales volume. However, the pressure resulted from either competition (laundry detergents) or retail industry has existed and may be increasing as indicated by lowering selling price (average price grew from 0.5% to -2.3% since 2015). Sales increased much faster in international market than US market.

The 2017 compared with 2016

Organic sales (excluding currency& acquisition) increased 2.7% primarily due to increase of 5% in sales volume offset by decrease of 2.3% in average price.

2016 compared with 2015

Organic sales (excluding currency& acquisition) increased 3.2% primarily due to increase of 3.1% in sales volume.

Fiscal 2015 compared with 2014

Organic sales (excluding currency& acquisition) increased 3.6% primarily due to increase of 3.1% in sales volume and increase of 0.5% in average price.

Its gross margin has increased from around 44% in 2014 up to about 46% of 2017 due to lower manufacturing costs. However, due to the same increase in SG&A as percentage of sales (around 26%), its operating margin is thus flat at about 19% in 2017.

Stock price

This stock currently has a stock price/cash flow ratio of 28($50). We think that its stock is being relatively fairly valued compared with its peers.