This company, primarily a manufacturer, marketer, and distributor of consumer packaged personal care products including beauty, grooming, health care, fabric and home care, and baby care categories, 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 sales volume has been influenced by the product price in developing markets. The decrease in sales volume in2016 and 2015 is primarily due to rising price on products selling in developing market as a response to rising US dollars.
The first nine months fiscal 2018 compared with the same period of 2017
Organic sales (excluding currency and acquisition) increased 1% primarily due to increase of 2% in volume offset by decrease of 1% in price.
The fiscal 2017 compared with the 2016
Organic sales (excluding currency and acquisition) increased 2% primarily due to increase of 2% in volume.
The fiscal 2016 compared with 2015
Organic sale (excluding currency and acquisition) was flat driven by decrease of 1% in volume and increase of 1% in price.
Fiscal 2015 compared with 2014
Organic sale (excluding currency and acquisition) increased 1% driven by increase of 2% in price offset by decrease of 1% in volume.
Its gross margin has increased from around 48% in 2014 up to about 50% of 2017 due to saving in production. Its operating margin thus increased to about 21% in 2017 with a slightly lower SG&A as percentage of sales (about 29% at 2017).
Stock performance
This stock currently has a stock price/cash flow ratio of 21. We think that its stock is being relatively fairly valued compared with its peers.
