Today, I was looking for stocks that are in the consumer goods sector, with a market capitalization greater than or equal to $8 billion, a current ratio greater than or equal to two and have a price-earnings ratio between 0 and 20, I ended up with these three stocks:
Source: WSJ Stock Screener
Brown-Forman Corp. (BF.B, Financial), the spirit, wine and ready-to-drink cocktail (RTD) brands which the principal is Jack Daniel's, closed fiscal 2016 showing a 5% increase in the underlying net sales, driven by developed markets including the United States which grew underlying net sales 6% (+1% reported) and helped offset the economic slowdown in the emerging markets and Global Travel Retail. The underlying operating income increased 8%. The underlying growth in sales and operating income was led by the Jack Daniel's family of brands. The company returned $1.4 billion to shareholders ($1.1 million in buybacks and $266 million in dividends). The company generated an ROIC of 23% and a ten-year TSR of over 12%, outpacing the S&P 500's 7% per year.
For Fiscal Year 2017, Brown-Forman Corporation predicts underlying net sales growth of 4% to 6%, led by premium American whiskey brands, underlying operating income growth of 7% to 9% and diluted earnings per share of $3.42 to $3.62.
Foot Locker Inc.(FL, Financial) the retailer of shoes and apparel which operates through the two segments of Athletic Stores and Direct-to-Customers, closed the second quarter of 2016 reporting a 4.7% increase in comparable-store sales across basketball, running and classic footwear, as well as apparel and a 5% increase (Y/Y) , to $1.78 million (from $1.69 million in the comparable quarter of 2015) beating analysts’ expectations by $20 million. Excluding the effect of foreign currency fluctuations, total sales for the second quarter increased 5.4%. The company posted gains in all regions and channels in which it operates.
In the second quarter of 2016, the company reported a 6.7% increase (Y/Y) in net income ($127 million) and a 11.9% increase (Y/Y) in EPS (94 cents).
In the first half of 2016, the company’s net income increased to $318 million (+5% Y/Y) or $2.33 per share (+8.9% Y/Y).
Sales and comparable store sales increased of 4.3% (Y/Y) and 3.7% (Y/Y). Excluding the effect of foreign currency fluctuations, total year-to-date sales increased by 4.6 %.
In the second quarter, the company's merchandise inventories were $1.3 million, +1.7% Y/Y (or +1.9% using constant currencies).
As of July 30, the company's cash totaled $945 million, while the debt on its balance sheet was $129 million.
The company spent approximately $188 million to repurchase 3.35 million shares during the quarter and paid a quarterly dividend of 27 cents, spending $37 million and in the first half of 2016, $350 million was returned to shareholders as result of the company’s strong financial position.
During the second quarter, the company opened 23 new stores, remodeled or relocated 64 stores and closed 18 stores.
Michael Kors Holdings Ltd. (KORS, Financial), the global accessories, footwear and apparel company that operates its business through the three segments of retail, wholesale and licensing, closed the first quarter of 2016 reporting a 0.2% Y/Y increase in total revenue beating analysts’ expectations by $34.86 million. Retail net sales increased 7.6% to $562.9 million, driven primarily by 221 net new store openings since the end of the first quarter of 2016. Wholesale net sales decreased 7.0% to $394.4 million (or -7.2% on a constant currency basis). Licensing revenue decreased 20.9% to $30.6 million.
The gross profit decreased 2.0% to $591.3 million and the gross profit as a percentage of sales was down 130 bps to 59.9%.
The income from operations was $186.9 million and the company's operating margin rate decreased 630 bps to 18.9%.
Excluding $8.9 million after-tax, or five cents per diluted share, of one-time costs related to the acquisition of the company's Greater China licensee, the net income attributable to MKHL for the first quarter of fiscal 2016 was $156.0 million, or 88 cents per diluted share, beating analysts’ expectations by 14 cents.
Looking ahead, the company expects second quarter 2017 revenue to be between $1.07 billion and $1.08 billion. Diluted earnings per share are expected to be in the range of 84 cents to 88 cents for the second quarter of fiscal 2017.
As of July 2, the company had $248.6 million in debt, which was recorded within short-term debt in its consolidated Balance Sheet. This debt consisted of borrowing under the company's revolving credit facilities. The amount available for future borrowing is approximately $749.4 million.
During the first quarter, the company repurchased 8,025,749 of the company's ordinary shares for approximately $400 million in open market transaction.
Disclosure: I have no positions in any stock mentioned in this article.
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