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  • Ruindog ha respondido al debate Ted SeeksQuality en el foro Estrategia hace 7 meses, 1 semana

    Looking at KHC, GIS, and SJM… Which is the strongest?

    GIS is doing okay on cash flow, with $2.0B FCF vs. $1.2B in dividends over the TTM, but they are not yet making any real headway on the debt. It spiked three quarters ago and hasn’t really budged since. Operating margins are down since FY17, though some of that may be product mix with the acquisition.

    The KHC financials for the last quarter still have not been uploaded by Morningstar. Trapping Value expresses concern about their margins. Their cash flow has also been a clear concern, and their debt continues to increase.

    SJM is also facing some margin pressure, with operating margins down to 16.1% over the TTM (they just reported the third quarter of FY19) from 17.1% in FY18. Yet once again, that includes a recent acquisition that may skew comparability. FCF is down over the last couple years, but still more than sufficient to support the dividend. And they’ve made noticeable progress on the debt over the last two quarters, bringing LT debt down by almost 15% and total liabilities down by 7%. That is more than twice the progress that GIS is making on THEIR debt load.

    GIS has been rewarded for the vision demonstrated in their plan for Blue Buffalo. I’ve questioned the ability of SJM management to execute, and they have badly missed guidance multiple times over the last few years. Still, the past-looking financials look at least as good for SJM as they do for GIS — and both are in better shape than KHC as far as I can tell.