This company, primarily a manufacturer, marketer, and distributor of consumer packaged personal care products including oral, personal and home care, and pet nutrition, has been grouped into personal care sector in personal care industry.
It seems that demand for products of companies in this sector has been very strong in the past three years as indicated by continuing increase in both sales volume and price for the typical companies ( sales volume growth rate : 0.8-1.5%; organic sales growth rate: 1.7%-3.3%). While sensitive to price, the developing markets contribute significantly to the growth in sales. However, those growths have not completely been reflected in companies’ performance as a result of unfavourable US dollars. We have seen strongest growth in demand in oral product category.
It seems that the distribution channels, probably determined by brands and market concentration, matter in the currently unfavourable retail industry environment. Sales decreased significantly for some less recognised brands, which usually have less control on distribution of their products.
Sales increase has resulted in improved margins according to some typical company’s data. The typical companies’ gross margin is about 51% in 2017. With a slight increase in SG&A as percentage of sales (about 30% in 2017), the typical operating margin went up to about 21% in 2017.
The typical average stock price/cash flow ratio is about 23.
It seems that the demand for products of this company has been strong and growing driven by its increase in both sales volume and price. It seems that this company has been able to find a balance in raising price and gaining increase in sales volume. The growth mostly comes from oral care products.
The fiscal 2017 compared with the 2016
Organic sales (excluding currency and acquisition) increased 1% primarily due to increase of 0.5% in volume and increase of 0.5% in price.
The fiscal 2016 compared with 2015
Organic sales (excluding currency and acquisition) increased 4% primarily due to increase of 1.5% in volume and increase of 2.5% in price.
Fiscal 2015 compared with 2014
Organic sales (excluding currency and acquisition) increased 5% primarily due to increase of 1.5% in volume and increase of 3% in price.
Its gross margin has increased from around 48.5% in 2014 up to about 60% of 2017 due to and cost saving and rising price. Its operating margin thus went up slightly to about 25% in 2017 due to a slightly higher SG&A as percentage of sales (about 37% at 2017).
Stock performance
This stock currently has a stock price/cash flow ratio of 24. We think that its stock is being relatively overvalued compared with its peers.
