Procter & Gamble (NYSE: PG) reported its Q4 and full-year results on Tuesday. The numbers looked very good to me (save for one, which I'll get to). P&G was up over 3% on Tuesday. Granted, the Dow saw one heck of a rally yesterday, but even so, P&G deserved a bid just due to its blue-chip corporate performance.
Revenues for the quarter increased 10%, and adjusted earnings per diluted share jumped over 19% to $0.80. For the year, revenues increased 9% and adjusted earnings per diluted share rose 15% to $3.50. As I stated in my earnings preview from the other day, Wall Street was looking for adjusted earnings to be around $0.78 per share. So P&G beat by two pennies.
Of course, the earnings beat is nice, but cash flow is even nicer. In fact, management likes to evaluate itself by comparing its free cash flow to net earnings. P&G would like the so-called "free cash flow productivity" metric to equal at least 90%. Well, shareholders need not worry, since productivity in these terms was 96% for the quarter and 106% for the fiscal year. Free cash flow for the year expanded by 21%, and it was more than enough to power P&G's great dividend.
TheStreet.com's Jim Cramer says 30%-40% discounts have a way of bringing out the buyers.
Home prices in Stockton, CA are down 40%. In Daytona, FL, houses are priced at 30% discounts with amenities. The Inland Empire of California -- you name your price. That's how the madness ends: with huge price cuts, the way it ended in Bradenton, FL.
And believe me, we get more Fannie Mae (NYSE: FNM) (Cramer's Take) money -- forget these darned covered bonds, let's just solve the problem. You get buyers after a year and a half that buyers went on strike.
Remember, while we can't live in stocks, we know they trade like houses, and when the first stocks to go down bottom, the others are not far behind.
With the new housing bill, the rate of foreclosures will go down and the bargains will be quite evident for those who want to take them. Either a new administration will remove the fear of the illegal immigrants from buying homes -- they were a huge part of the hard hit Arizona, Florida and California markets. Or the dramatic decline in inventory at the homebuilding level has given us breathing room.
After a day that saw U.S. equity markets decline in the neighborhood of 2%, U.S. stock futures earlier this morning pointed to a rough start Tuesday as well. News late Monday the Merrill Lynch said it's selling a big slice of its asset-backed securities and $8.5 billion in stock, renewed concerns over the financial sector health. But futures have started creeping upward, ahead of the latest readings on house prices with the Case-Shiller home price index for May and Conference Board reading of consumer confidence for July.
Meanwhile, we're still in the middle of earnings season and today
Northrop Grumman (NYSE: NOC), Viacom (NYSE: VIA), Valero Energy Corp. (NYSE: VLO), United States Steel Corp. (NYSE: X)
Electronic Arts (NASDAQ: ERTS) will report after the close of tradin
The big story making headlines since late Monday is the bombshell Merrill Lynch (NYSE: MER) that it is taking an enormous $5.7 billion write-down on losses from mortgage-backed securities (MBSs) and plans to raise $8.5 billion. MER shares already dropped 11.6% Monday before the news was out, and while they're rebounding 2.75% this morning, many are very uncomfortable with Merrill's current situation and actions.
Alcatel-Lucent (NYSE: ALU), the French telecommunications giant, is finally getting rid of its CEO Patricia Russo and Chairman Serge Tchuruk who will both resign later this year. It's no surprise shares are rebounding over 6% in premarket trading. ALU also reported its sixth consecutive quarter of losses. Alcatel-Lucent reported a net loss of 1.1 billion euros ($1.73 billion) for the second quarter including an euro810 million ($1.3 billion) goodwill writedown.
"Any further market weakness creates creates another opportunity to acquire some outstanding stocks," suggests Kelley Wright, noted for his focus on blue chip, dividend-paying stocks.
In his Investment Quality Trends newsletter, he looks at the benefits of keeping a long-term focus, the value of dividend districutions to an investor's long-term returns, and his current "timely ten" picks for conservative investor.
"The cash dividend for the Dow is $322.40. One year ago the dividend was $284.06. Amidst all the turmoil in the markets and the economy something must be going right with the Dow 30 companies because the dividend is ever climbing.
"Dividends, as we all know, can only come from the reality of earnings; you can't pay what you don't have. The dividend yield on the Dow is currently 2.66%, which represents an 11% downside to a 3.0% yield and the historically repetitive area of Undervalue.
"Will the Average make it down to that level? No one knows but that isn't the point. At current levels the upside is FAR greater, particularly in many of the stocks in our Undervalued area.
It wasn't a super quarter for Kimberly-Clark (NYSE: KMB). The consumer-products company only met expectations set for it by Wall Street. But, sometimes, that's pretty good, given the conditions the business is working in. As a matter of fact, I see that Brent Archer penned a recent post discussing how inflation is hurting Kimberly-Clark (and just about every other entity, as well). At that time, the company projected a $900 million increase in terms of inflationary pressures, double management's previous estimate. So, looking through this current earnings release, I can't help but feel that things could have been worse.
For the second quarter, net sales rose 11% to $5 billion. Earnings on an adjusted basis dropped a penny compared to the year-ago period, coming in at $1.03 per share. Like I said, that matched expectations, according to Briefing.com. Guidance for the future also appears to be in-line. Kimberly-Clark seems, to me at least, to be holding its own during a difficult time. And here's a couple cash-flow data points that should appeal to many investors. Operating cash flow for the quarter was up 16% to $753 million. Prudent management of the company's working capital benefited this metric. And on a six-month basis, cash from operations also increased, albeit not by much. That sum rose a little under 2% to almost $1.2 billion. I like to see good cash-flow numbers like that, especially for dividend-paying concerns.
And speaking of dividends, Kimberly-Clark's stock is trading at a great yield, over 4%. Of course, that means that investors buying today will need a lot of patience. You'll be paid to wait, but if you're into fast capital-appreciation rates, you probably won't get it here, not in this trading environment. Inflation will continue to be a concern for it, as well as consumer-product colleagues such as Procter & Gamble (NYSE: PG), Colgate-Palmolive (NYSE: CL), and Energizer (NYSE: ENR).
This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.
If you like to save money on gas and live near a Wal-Mart in the Southeast and Midwest, chances are you are filling up these days at stations operated by Murphy Oil Corp. (NYSE: MUR), which is headquartered in the small town of El Dorado, Arkansas.
Those Murphy USA gas stations, located in parking lots of Wal-Mart Stores (NYSE: WMT), are just a small part of Murphy's many energy-related businesses. Murphy Oil is a giant, publicly-traded oil and natural gas exploration and production company with operations as far afield as Malaysia and Ecuador. Much of its U.S. drilling and refining is done off the shores of Louisiana, and some of that equipment was damaged during Hurricane Katrina. Sales in 2007 were more than $18 billion and the stock is up 60% in the past year. The company was recently ranked No. 134 in the Fortune 500 (to put that in perspective, Google is ranked 150 and Nike 153).
Corporate headquarters to all this (as well as a timber company that was spun off from Murphy in 1996), is El Dorado, population of 20,000. A boom town in the 1920s when oil was discovered, El Dorado has a colorful history and currently boasts summertime reenactments of a Wild West style gun fight on the courthouse steps, as well as a historic "haunted" theater. The town participated in the federal "Mainstreet" program, which provides grants for restoring historic downtowns, suggesting that the downtown was once in rough shape, but has since been prettied up.
Many of us would be happy to benefit from a quiet retirement without facing concerns of losing all of our hard earned money. Fortune 40 gives us a helping hand by suggesting some big names to invest in that could offer us the results that we are looking for.
One such company is Abbott Laboratories (NYSE: ABT), whose earnings surged 35% during its last quarter, helped by its famous anti-inflammatory drug Humira and HIV treatment Kaletra. Looking ahead to the company's performance, CEO Miles White is planing to keep his main attention on its medical devices unit which is seen as a key element against strong competition.
Fortune 40 also looks at beverage maker The Coca-Cola Company (NYSE: KO), which benefits from strong international gains able to beat recent weakness in U.S. In addition, it looks like the company's acquisition of Glacéau and its VitaminWater brand offer it a good support to outperform on the market.
ThinkPanmure intiated coverage of Intel (NASDAQ:INTC) with a "buy", according to the the AP.
Wachovia downgraded Lehman (NYSE:LEH) to "market perform" from "outperform" according toBriefing.com. The newservice also reports that Caris initiated Colgate-Palmolive (NYSE:CL) as "above average."
According to 24/7 Wall St. Callaway Golf (NYSE:ELY) was started as Outperform at Raymond James. The financial website also writes that Coca-Cola Company (NYSE: KO) was raised to Buy from Hold at Deutsche Bank.
I love coupons; who doesn't? They are, arguably, one of the most important marketing tools used by companies such as Procter & Gamble (NYSE: PG), Colgate-Palmolive (NYSE: CL), and General Mills (NYSE: GIS). I also love coupon distribution on the web, so I'm hoping a new technology reported on by BusinessWeek really takes off.
A company called Coupons, Inc. has developed a system dubbed Brandcaster. It essentially follows Google's (NASDAQ: GOOG) model of monetization. Depending on where you are on the web and what you are looking at, the Brandcaster will determine if a coupon may be applicable to you. It will then try to get you to access the coupon and print it up. Web sites who use the application will be given a cut of revenues generated from successful coupon printings. So, speaking hypothetically, if I'm on a site that's dedicated to video games, maybe this Brandcaster thing will someday tell me that I can print up a coupon allowing me to get $5 off a new software title.
If this is promoted properly, and if the value to consumer companies can be adequately communicated, then I think Coupons, Inc. has a hit on its hands. Like I say, people love coupons, and I think they are more likely to act on printing out a coupon then they are to, say, buy a product immediately online through a banner ad. I see this kind of advertising as being more effective over the long-term than other kinds of ads.
This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.
As far as toothpaste goes, I was raised on Crest. My entire childhood, it was always Crest. Except when I spent the night at Grandma's and Grandpa's. They had Colgate. What a treat! Here are some facts about both...
Colgate toothpaste is the flagship product of Colgate-Palmolive Co. (NYSE: CL), an international operation in more than 200 countries. Total sales were almost $13.8 billion in 2007, the highest ever for the company, and it's notable that 75% of the sales were made outside the United States. Net income was up 28% to $1.7 billion for the year. Toothpaste is one of many personal care products that the company makes, including toothbrushes, soaps, and deodorants. The oral care products accounted for 40% of Colgate's sales in 2007.
Colgate-Palmolive (NYSE: CL) reported Q1 results on Wednesday. By now, you know the drill when it comes to consumer-products companies -- weak-dollar-helped-and-commodity-costs-did-not-help. I gotta say, though, that Colgate-Palmolive showed that vigilance in terms of costs can have a positive impact, and that a business does not have to be defined by inflation.
Net sales exploded to the upside by more than 15% (again, currency effects). Net income likewise charged higher, rising 17% to 90 cents per share on an adjusted basis. I know -- superlatives such as "exploded" and "charged higher" might seem a bit hyper here, but it's always cool when a consumer-products company hits those double-digit increases. Colgate-Palmolive, like Clorox (NYSE: CLX) and Procter & Gamble (NYSE: PG), leverages its stable of brands to drive growth in cash flows (Procter & Gamble, by the way, also recently reported quarterly results). This worked like a charm, since cash flow from operations during the past three-month period increased 17%. Way to go, management. Margins, however, were pressured, as can be expected, and they will continue to be pressured in the near future.
The earnings release mentioned the flagship Colgate toothpaste product -- I am a user of the brand, and in fact, I bought a new variety earlier this week. I've said it before and I'll say it again -- the supermarket is full of investing ideas, and Colgate-Palmolive is one of them. The company had a great quarter, it beat expectations according to Briefing.com -- albeit by the usual suspect, namely the "proverbial penny" -- and it seems solid enough. A potential core holding, Colgate-Palmolive should do well over the coming year. Yesterday's 6.7% drop in the price of the shares could have been seen as a buying opportunity for patient, long-term investors, but I'll concede that the stock could languish for a little while.
Disclosure: I don't own shares in any of the companies mentioned; positions can change at any time.
Profit rose to $2.71 billion, or 82 cents per share, compared with $2.51 billion, or 74 cents per share, a year ago. Revenue rose 9% to $20.46 billion from $18.69 billion last year. The Cincinnati-based company was expected to earn 81 cents on revenue of $21.44 billion, according to Thomson Financial.
"P&G delivered strong results in-line with long-term targets in a challenging economic and competitive environment with broad-based sales and share growth, earnings growth and overhead cost improvement," said Chief Executive AG Lafley in the earnings release.
Shares of the maker of Tide (my favorite detergent) and Pampers (our family's preferred diaper for my son) have slumped more than 10% this year under-performing rivals including Church & Dwight Co. (NYSE: CHD) and Colgate-Palmolive Co. (NYSE: CL). Uniliver Plc. (NYSE: UL) has fared slightly worse than P&G.
Kimberly-Clark (NYSE: KMB) reported for the first quarter today. Net sales increased almost 10% to $4.8 billion. Adjusted earnings per share increased 5% to $1.08. That's a rather small jump, granted, but you know something, it was enough to keep the stock in the green (at the time of this writing, at least) instead of in the red on a day when the major market averages -- and just about all of the stocks in my personal portfolios -- are bathing in the evil crimson color of doom. And according to Briefing.com, Kimberly-Clark played the beat-the-expectations game and won by the proverbial penny! Shareholders should be pleased.
A non-pleasing item to be found in the release centers on cash from operations -- it decreased by about $100 million to $426 million due to changes in working capital. That doesn't concern me so much right now, though, since Kimberly-Clark will probably do well over the coming years in terms of cash generation. The company, by the way, has been repurchasing stock, so management seems pleased with the shares as a potential investment idea.
Kimberly-Clark, which is a consumer-products business in the league of entities such as Procter & Gamble (NYSE: PG), Energizer (NYSE: ENR), Colgate-Palmolive (NYSE: CL), and Unilever (NYSE: UL), could be a value right now based on its P/E ratio and dividend yield. Out of the stocks mentioned here, I like P&G the best, but I do respect Kimberly-Clark -- in fact, it was mentioned recently in an article by Steven Halpern that centered on an analyst's picks for quality and yield.
Disclosure: I don't own shares in any of the companies mentioned; positions can change at any time.
Procter & Gamble (NYSE: PG) reported its Q4 and full-year results on Tuesday. The numbers looked very good to me (save for one, which I'll get to). P&G was up over 3% on Tuesday. Granted, the Dow saw one heck of a rally yesterday, but even so, P&G deserved a bid just due to its blue-chip corporate performance. 
After a day that saw U.S. equity markets decline in the neighborhood of 2%, U.S. stock futures earlier this morning pointed to a rough start Tuesday as well. News late Monday the Merrill Lynch said it's selling a big slice of its asset-backed securities and $8.5 billion in stock, renewed concerns over the financial sector health. But futures have started creeping upward, ahead of the latest readings on house prices with the Case-Shiller home price index for May and Conference Board reading of consumer confidence for July.
"Any further market weakness creates creates another opportunity to acquire some outstanding stocks," suggests 
This post is part of our 
Many of us would be happy to benefit from a quiet retirement without facing concerns of losing all of our hard earned money. Fortune 40 gives us a helping hand by 
This post is part of our 
Here are some highlights from this past week's 
Here are some highlights from this past week's 
Colgate-Palmolive
Consumers these days are so lacking in confidence that 
Kimberly-Clark
Slow approach to raising bank capital loses the race against write-offs
Cramer on BloggingStocks: The SEC's waffling will be deadly
How Fannie and Freddie will fail
