I guess I need to get out more often.
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TheMotorcycleBoy wrote:simoan wrote:TheMotorcycleBoy wrote:So could anyone here comment on this, to confirm or deny, that adding RB. to a portfolio which already holds ULVR, GSK and JNJ, is bordering on pointless, were my main objective to add a cleaning products manufacturer onto that portfolio. That is, putting current concerns about the numbers temporarily to one side.
thanks Matt
I think you're looking at it wrongly. Why do you want to own a company with such a poor balance sheet? This is the Company Analysis board so you should at least consider the financials.I don't see the point of worrying about where it fits in your portfolio in that context. How much of the profit of RB. is cleaning products anyway? I have no idea but there's no point buying a company where you only get a small exposure to such products and large exposure to products that aren't. I suspect something like Clorox gives you more exposure to cleaning products and has a much stronger balance sheet and profitability metrics.
All the best, Si
Simon,
With all due respect, I like to tackle "Company Analysis" from several angles. Quantitative and qualitative. That said I'd like to consider i.e. analyse the other aspects of the firm, i.e. the brands, creditability of their board.
Anyway, what's the speil about Clorox? Where are they....what's their EPIC stock code?
Matt
The balance sheet is obviously something for me to consider, and I will at some stage. However, with 0.1% as being the UK's (and many others') base rate for the foreseeable, I'm not planning on stressing over it immensely. But TBF I've only filled in 2014-2016 of my sheet so far. I'm about to bung in 2017-2019
TheMotorcycleBoy wrote:My concern isn't so much the balance sheet per se. ...
My problem is that the high gearing levels are clearly a result of a failed business decision i.e. the acquistion of Mead Johnson.
ADrunkenMarcus wrote:TheMotorcycleBoy wrote:My concern isn't so much the balance sheet per se. ...
My problem is that the high gearing levels are clearly a result of a failed business decision i.e. the acquistion of Mead Johnson.
RB's operating margin has held up even as ROCE fell significantly,
which offers hope that they can recover as they deleverage.
monabri wrote:The OM is reported pretty flat over the last 10 years...almost a "pencil straight line" at 26%.
http://financials.morningstar.com/ratio ... region=GBR
https://qz.com/1323471/ten-years-after- ... t-remains/
( note the security tags in the photo).
TheMotorcycleBoy wrote:monabri wrote:The OM is reported pretty flat over the last 10 years...almost a "pencil straight line" at 26%.
http://financials.morningstar.com/ratio ... region=GBR
https://qz.com/1323471/ten-years-after- ... t-remains/
( note the security tags in the photo).
Except for 2019 where on a statutory basis it's MINUS 15.21% due to it being an operating loss.
scrumpyjack wrote:TheMotorcycleBoy wrote:monabri wrote:The OM is reported pretty flat over the last 10 years...almost a "pencil straight line" at 26%.
http://financials.morningstar.com/ratio ... region=GBR
https://qz.com/1323471/ten-years-after- ... t-remains/
( note the security tags in the photo).
Except for 2019 where on a statutory basis it's MINUS 15.21% due to it being an operating loss.
Hang on, you're talking about the actual bottom line there. You are not meant to look at that. All that matters is the 'adjusted', 'core', 'ignore anything inconvenient' profit.
TheMotorcycleBoy wrote:ADrunkenMarcus wrote:TheMotorcycleBoy wrote:My concern isn't so much the balance sheet per se. ...
My problem is that the high gearing levels are clearly a result of a failed business decision i.e. the acquistion of Mead Johnson.
RB's operating margin has held up even as ROCE fell significantly,
Are you sure Mark?
In FY2019 they actually reported an operating loss which would be imply a -ve OM. Albeit a statutory one. That was why I included CROCI in my profitability+gearing comparison with REL, since the loss was mostly down to a huge impairment charge, and as this would be added back in the cash flow calcs it seemed wise to appraise this metric too.
TheMotorcycleBoy wrote:“I feel like foreign baby powder is better,” says 25-year-old Zeng Yingpei, who lives in the southern city of Foshan and buys German baby formula for her two-year-old. Citing the Sanlu scandal, she quoted a popular refrain: “It only takes one mouse dropping to ruin the whole pot of porridge.” [/i]So perhaps this is a plus for RB.?
ADrunkenMarcus wrote:TheMotorcycleBoy wrote:“I feel like foreign baby powder is better,” says 25-year-old Zeng Yingpei, who lives in the southern city of Foshan and buys German baby formula for her two-year-old. Citing the Sanlu scandal, she quoted a popular refrain: “It only takes one mouse dropping to ruin the whole pot of porridge.” [/i]So perhaps this is a plus for RB.?
The same may well be true of condoms.
Best wishes
Mark.
KnightOfSpring wrote:Fundsmith have just announced they have exited "their longstanding position" in Reckitts in their November factsheet. Seems an odd time to do it, although don't know what price they had exited at as it has been volatile in November. From memory they said the arrival of the new CEO bought their holding more time. He seemed to be turning things round and has (the CEO) bought more shares (as has the Chairman I think) on the recent weakness. Doesn't seem to tie in with their Chlorox sale, which is also big in cleaning and had a clear boost from Covid, as the price was much stronger there and was probably a small holding as newly initiated. Perhaps they have uncovered something of concern that has tipped the balance for them.
Although this may be stock specific, I don't get the sense that Terry has the same feeling that Nick Train has that many UK shares are undervalued. Nick indeed seems to be getting increasingly more vocal on the UK undervaluation. UK shares now worth only 9.9% of Fundsmith's portfolio despite being much lower rated. I know Terry focusses more on ROCE than PEs but seems more comfortable holding US shares with PEs of 40-70 than UK ones in the same sector (with slightly lower ROCEs) on PEs of 20-30.
KnightOfSpring wrote:Yes quite possible that it was waiting to be sold. The last CEO has got a lot to answer for with the Mead Johnson acquisition and much else besides (as I have previously posted a relative worked there but left as they couldn't deal with the oppressive atmosphere nor the chaotic nature). The new CEO from Pepsi (a Terry Smith holding) seems much better and has (possibly) quickly resolved many issues.
Thinking about it, Smith might of just got rid of the last few shares of RB in November and so may have taken advantage of some good price strength in the months before that (not too disimilar to Chlorox). UK exposure fell from October to November from 11% to 9.9% which wasn't that large an amount when you consider that both Sage and Intertek fell a reasonable amount on results.
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