Feb 15, 2017|
Erin Lash (Morningstar, CL, CAG) by The Financial Exchange
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
Airlines from Morningstar joins us now to talk about a couple consumer staples stocks Aaron thanks for joining us. Aaron let's start first with ConAgra brands stock was a little bit about this company in what you pieces here. Yeah can you crippling and actually just to split its business back in November. It's separated off its commercial foods business which is now treating as lamb Weston. And right now than it does business incorporates dared. Consumer product. Everything from hunt's tomatoes. You know would be ready whipped. Different frozen meals across the various number of brand. It is what we consider. A portfolio of document their tier brands as a failed to amassed much pricing power with consumers and subsequently negotiating leverage. We wish retailers and as a result we don't think that's how maintain a competitive clout to determine the its peers. I'm at a mass. In addition the firm's profitability also lagged it appears that generating operating margins in that. Low to mid teens pet bottle first as the mid to high teens to low twenties but it appears that both. And we think that that will persist despite efforts to extract cost from the does that. You're actually bearish on the right now. Yet we think that the where shares are trading it looks relatively perhaps trading at about a 40% premium to our valuation. Particularly given it some of the factors that I mentioned. Including the weaker brand portfolio delighting profitability. And the inability. To meet cure really turn that around and kind of leveled the playing field. Come with the rest of the package for the states. Very good let's turn over now to Colgate Pall mall company is this what you bear out as well or do you feel good about this one. No this is the name that we think looks relatively attractive to enlist our current market and the company reported results. I'm a few weeks ago at the shares traded down following concerns that the toppling growth may not continue at the pace today as it. If you look back to 2009. Deferment been able to grow underlined killed about 5% clipped. Which is fairly impressed that given them deter categories. On deck of that Colgate impeachment however we think that. The recent slowdown is more reflective kind of one off factors and we think that the firm's. Efforts to reinvest behind product innovation that resonates with local consumers continued to push on pipeline growth. Tibetan mid single digit rates and an annual basis longer term. Colgate generates about 20% of their sales in North America about. Peacekeepers had an emerging markets. Until we can get their a solid growth trajectory I'd. Looking at a company like this one of their key competitors is Procter & Gamble. Who has struggled a little bit in recent years. To continue to grow and they've been getting some brands is Colgate doing the same thing are they getting thinner and any areas. No Coke can't operate at very focused business as a skiing and if you look at that portfolio up. You know it's primarily consists of their oral care business accounts for the bulk of their sales. And then they also have any veterinary business with hill's pet nutrition. Which accounts for about ten to 15% of their consolidated sales based. I'm in the mail I have dot com home care and personal care business. So in terms. Dishwashing soap. You needed moisturizer under this bid explained internationally protected smaller piece of their business that there are ready. Clearly focused and haven't been undergoing the brain rationalizations that he's seen some of their peers like Procter gamble on Dirk out. Very good air and thank you very much for joining us today we appreciate it. Aaron lasts from morning to start talking about Colgate with a ticker CL. And connect or brands with a ticker GAG.