Drip
Portfolio Report
Wednesday, November 12, 1997
by Randy Befumo
([email protected])
ALEXANDRIA, VA (Nov. 12, 1997) -- Today's contestant, Grand Metropolitan, is kinda complicated because you can only get its financial information in British pounds. The current pound-dollar exchange rate is $1.00 pound to $1.70 dollars. With 100 pence to the pound this means 100 pence equals 170 cents.
All of this currency exchange information given, the info on Grand Met was spotty and difficult to find. The numbers used for sales and operating earnings, as you can see, are 1996 because I couldn't find 1997. Heck, I even cheated a bit and used the office Bloomberg. Suffice it to say, some of these numbers do not reflect up to date reality, but this only helps to argue against investing overseas unless you are willing to put a lot of work into a company.
Company: Grand Metropolitan
Ticker: GRM
Recent Price: $525 pence = $5.25 pounds
1996 sales: $7,907.0 million pounds
1996 oper. earnings: $1,077.0 million pounds
Trailing 12-Month EPS: $42 pence EPS
Fiscal '98 EPS estimates: $31.51 pence EPS
Fiscal '99 EPS estimates: $33.87 pence EPS
Shares outstanding: 528.5 million
Annual dividend: $2.14 US
Description: A huge fortress of global brandedness, we would have been remiss in our analysis of food if we had not included British-based Grand Metropolitan. Honestly, between you, me, and the wall, unless it is awfully cheap we probably won't go much further with it just to avoid all of the currency translation hassles.
Major brands: Pillsbury, Green Giant, Haagen-Dazs, Old El Paso, Progresso, Hungry Jack, Totino's, Jeno's, Pappolo's, Downflake, Smirnoff, Stolichnaya, Bailey's Irish Cream, Amaretto, Popov, and Burger King.
Company Value: Grand Met's current market capitalization, the value of all of its outstanding shares, is $2,774.6 million pounds (528.5 million * $5.25 pounds).
The company has $967 million pounds in cash and $2,407 million pounds in long-term liabilities according to the recent SEC filings, available at www.sec.gov. If we subtract the cash and add the debt to the market capitalization, this gives us the current value of the entire company, or the enterprise value. This is $4,214.0 million pounds.
Valuations: To get the valuation relative to sales, we simply take enterprise value and divide by trailing sales to get 0.53 ($4,214.0 pounds million / $7,907.0 pounds million).
Grand Met trades at 12.5 times trailing earnings ($525 pence / $42 pence EPS), 16.7 times '98 estimates ($525 pence/ $31.5 pence EPS), and 15.5 times '99 estimates ($525 pence/ $33.87 pence EPS).
Margins: Operating earnings divided by revenues are the operating margins, or 13.6% ($1,077 pounds million / $7,907 pounds million).
Leverage: Long-term debt divided by revenues is one of my favorite ways to think above leverage. With $2,407 million in long-term liabilities and $7,907 million in sales, we have a 30.4% debt-to-sales ratio.
Capital allocation: Management pays a 2.14% dividend. Beyond this, for lack of a decent recent balance sheet, it is hard to tell.
The numbers: For more info on how to figure out these simple ratios check Friday's report on ConAgra. If you have any questions, please e-mail me at [email protected].
TODAY'S NUMBERS
Stock Close Change
Intel $76 1/4 +1 1/8
Day Month Year History
Drip: +0.00% 0.00% 0.00% 0.00%
S&P: +0.00% 0.00% 0.00% 0.00%
NASDAQ: +0.00% 0.00% 0.00% 0.00%
Rec'd # Security In At
9/8/97 1 Intel $94.69
Base: $800.00
Expenses: $ 70.50 (Moneypaper)
Purchases: See above and below
Cash: $634.89**
Total Value: $710.00 apprx.
GOAL: The portfolio began with $500 on July 28, 1997,
adds $100 on the 15th of every month, and the goal
is to grow the port to $150,000 by August of the year 2017.
**Transactions in progress:
1. $81.00 sent on 10/17/97 to buy one share of JNJ and
enroll in its DRIP.
2. $300.00 sent on 10/23/97 to buy more shares of INTC.
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