By Yaser Anwar CSC of Equity Investment IdeasLast year when P&G bought Gillette, management said they “expect the transaction to be dilutive to earnings in the first two years,” so far even with the dilution the company just reported very good numbers ahead of the street today and raised guidance further.Management is on track to “derive $14 billion to $16 billion in synergies from this combination over time,” as they had said during a press conference in Oct. 2005. This is clearly evident in their numbers today, “Profit margin expanded during the quarter as sales growth, cost-cutting initiatives and the benefit of adding the higher-margin Gillette business more than offset acquisition-related expenses and higher commodity costs.” (Source: WSJ)A great company like P&G attracts great institutional investors. Warren Buffet’s Berkshire Hathaway owns upto 3.5% of their outstanding share float. It’s always nice to see WB on the side of shareholders.One of the areas where growth for P&G will come is developing countries, where it has 23% of the market share. This should also reduce it’s exposure to the unfavorable dollar outlook vs the Euro and Yen. Another positive about P&G is it’s high ROIC, about 24%.The falling energy and raw material prices should further help the company in it’s 4th Q as management acknowledged them as culprits in P&G’s rising expenses. On the positive side of this, the strong brand helps P&G, as it can raise prices.http://www.equityinvestmentideas.blogspot.com/
Analyzing Procter & Gamble (PG)
Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
Top Gaining Stocks
Top Losing Stocks