Consumer Staples Company Presentation Chad Hackett Adam Gale

Consumer Staples Company Presentation

Chad HackettAdam Gale

Consumer Staples Analysis

+ Dividends, Dividend yield is higher than S&P 500

- Earnings are declining relative to S&P 500

- Growing economy – Sector performs poorly during growth relative to S&P 500

Consumer Staples CompositionSIM Companies Procter & Gamble, 4.20% (Household

Products) Walgreens, 2.11% (Retail Drugs) Anheuser-Busch, 3.94% (Beverage -

Alcoholic)

Procter & Gamble

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

PROCTER & GAMBLE COMPANY (PG)PRICE 54.6 DATE 11-12-2004StockVal®

1111

1313

1515

17171919

2222

2626

3030

3434

3939

4545

5252

60

69

80

The Ohio State UniversityFisher College of Business

Price Change % Diff SP5

1-Day 1.11 0.20

1-Week 2.02 0.47

4-Weeks 1.69 -5.16

QTD 0.89 -5.36

YTD 9.33 2.83

2003 16.22 -10.16

2002 8.61 31.97

2001 0.88 13.92 FYE Jun 2004 EPS 2.33

First Call Data 2005 2006 2007

Mean Estimate 2.59 2.87 3.20

Change +11% +11% +11%

High 2.61 2.91 3.27

Low 2.56 2.84 3.12

Total 16 14 4

# Up 14 6 3

# Down 1 1 0

House Estimate

PE Ratio 21.1 19.0 17.1

Revenues ($Mil) 52,956

Market Value ($Mil) 138,503

Shares Out (Mil) 2,536.7

Daily Volume (Thou) 5,393

Daily Volume ($Mil) 294.4

Dividend Estimate 1.00

Payout Ratio 39%

Retention Rate 61%

Dividend Yield 1.83%

Data Page # 1

Business Analysis Businesses

Baby, feminine & family care Fabric & home care Health care Beauty care Food & beverage

Main Brands Pampers, Always Tide, Bounty, Downy Crest, Pepto Bismol Cover Girl, Pantene, Herbal

Essences Folgers, Pringles

Business: Demand

Expected EPS for 2005 : $2.59 11% increase from 2004

Solid marketing and product innovation skills

Established brand recognition both domestic and international

Constant demand for P&G products

Business: Supply

P&G’s growth for the future relies on foreign acquisitions and internal expansion overseas i.e. Wella AG acquisition in 2003

India and China remain strong growth drivers

Increased business in health and beauty-care by purchasing Clairol

DuPont AnalyticsPROCTER & GAMBLE COMPANY (PG) StockVal ®

Price 54.600 11/12/04 FYE Jun INT TAX ASSET

MARGIN% BURDEN BURDEN% TURN LEVERAGE

EBIT EBT T Sales Assets

------- ------- 1 - ---- ------- ------- ROE Acct ROE

Sales EBIT EBT Assets Equity Rpt% Adj% Adj%

2004 19.41 0.94 69.32 1.02 3.01 38.73 0.00 38.73

2003 18.65 0.93 68.87 1.03 2.83 34.70 3.60 38.30

2002 17.36 0.91 68.18 1.07 2.92 33.85 5.49 39.34

2001 13.79 0.85 63.30 1.14 2.83 24.05 12.14 36.19

2000 15.66 0.88 63.98 1.20 2.73 29.10 5.65 34.75

1999 17.02 0.90 64.46 1.21 2.60 30.98 3.17 34.15

1998 16.84 0.91 66.22 1.27 2.41 31.13 0.00 31.13

1997 15.95 0.92 65.06 1.29 2.33 28.74 0.00 28.74

1996 14.60 0.91 65.24 1.26 2.50 27.30 0.00 27.30

1995 13.40 0.89 66.13 1.25 2.76 27.24 0.51 27.75

1994 12.60 0.87 66.08 1.20 3.10 27.17 1.26 28.43

1993 2.96 0.39 77.08 1.24 2.97 -7.95 32.36 24.41

1992 11.56 0.85 64.89 1.32 2.65 22.28 -0.73 21.55

1991 11.40 0.87 65.98 1.39 2.55 23.25 0.00 23.25

1990 11.89 0.85 66.17 1.38 2.54 23.33 1.17 24.50

1989 10.89 0.83 62.20 1.37 2.48 19.22 1.24 20.46

1988 10.09 0.84 62.58 1.36 2.31 16.55 0.00 16.55

1987 5.71 0.64 53.00 1.27 2.24 5.48 7.68 13.16

Financial: DuPont Analysis

Valuation AnalysisStockVal®PROCTER & GAMBLE COMPANY (PG) Price 54.6

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

PRICE / YEAR-FORWARD EARNINGS14

21

28

35 HI 39.0 LO 16.0 ME 20.9 CU 20.3

11-11-199411-12-2004

PRICE / SALES1

2

3

4 HI 4.30 LO 1.44 ME 2.87 CU 2.87

11-11-199411-12-2004

NET PROFIT MARGIN ADJUSTED %6

8

10

12 HI 13.2 LO 7.8 ME 10.6 CU 12.7

12-31-199409-30-2004

GROWTH RATE ESTIMATE10

11

12

13 HI 14.00 LO 10.00 ME 12.00 CU 11.00

11-11-199411-12-2004

StockVal®PROCTER & GAMBLE COMPANY (PG) Price 54.61994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P CONS. STAPLES SECTOR COMPOSITE A (SP-30)0.6

0.9

1.2

1.5 HI 1.61 LO 0.81 ME 1.07 CU 1.16

11-11-199411-12-2004

PRICE / SALES RELATIVE TO S&P CONS. STAPLES SECTOR COMPOSITE A (SP-30) M-Wtd1.2

1.6

2.0

2.4 HI 2.60 LO 1.33 ME 1.90 CU 2.36

11-11-199411-12-2004

PRE-TAX MARGIN RELATIVE TO S&P CONS. STAPLES SECTOR COMPOSITE A (SP-30) M-Wtd1.2

1.5

1.8

2.1 HI 2.24 LO 1.36 ME 1.71 CU 2.16

12-31-199409-30-2004

GROWTH RATE ESTIMATE RELATIVE TO S&P CONS. STAPLES SECTOR COMPOSITE A (SP-30) M-Wtd0.7

0.8

0.9

1.0 HI 1.08 LO 0.79 ME 0.91 CU 1.02

11-11-199411-12-2004

Valuation Analysis

Recommendation

Hold Procter & Gamble. Remaining a strong player in the

consumer staples sector Internal growth abroadForeign market expansion through acquisition

James Gamble - 1837 William Proctor – 1837

Anheuser-Busch

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

ANHEUSER-BUSCH COMPANIES INC (BUD)PRICE 51.1 DATE 11-12-2004StockVal®

991010

1212

1414

1616

1919

2222

2626

3030

3535

4141

4848

55

64

75



1-Day 0.69 -0.22

1-Week 0.99 -0.55

4-Weeks 1.11 -5.75

QTD 2.22 -4.02

YTD -3.08 -9.57

2003 8.84 -17.54

2002 7.06 30.42

2001 -0.64 12.41 FYE Dec 2003 EPS 2.48


Mean Estimate 2.74 2.97 3.24Change +10% +8% +9%

High 2.78 3.07 3.32

Low 2.70 2.85 3.19

Total 16 18 5

# Up 0 0 1

# Down 16 16 4

House Estimate

PE Ratio 18.6 17.2 15.8



Shares Out (Mil) 790.1




Payout Ratio 36%

Retention Rate 64%


Data Page # 1

Business Analysis Businesses:

Domestic and International Beer

Packaging Theme Parks

Main Products Budweiser Michelob Busch Natural Light

Business: Demand Consumption is up .8% from 2003 International growth has contributed to at least

20% of A-B’s earnings over the past five years Anheuser-Busch and Tsingtao Close China

Investment Agreement Increased profits in China by 45%

Demographics – Growth of the 21 to 27 year old age group

Inelastic demand for alcohol in general

DuPont AnalyticsANHEUSER-BUSCH COMPANIES INC (BUD) StockVal ®

Price 51.060 11/12/04 FYE Dec INT TAX ASSET



------- ------- 1 - ---- ------- ------- ROE Acct ROE


2003 22.80 0.88 61.29 0.98 5.00 72.03 0.00 72.03

2002 22.06 0.88 60.30 0.97 3.95 54.37 0.00 54.37

2001 21.21 0.87 60.99 0.95 3.31 41.62 0.59 42.21

2000 20.23 0.86 59.89 0.97 3.21 38.55 0.79 39.34

1999 19.47 0.87 60.94 0.94 3.09 34.46 0.00 34.46

1998 18.84 0.86 60.48 0.94 2.94 29.87 0.00 29.87

1997 18.74 0.88 60.97 1.01 2.75 28.97 0.25 29.22

1996 19.35 0.89 61.08 1.04 2.49 28.12 -1.59 26.53

1995 16.17 0.87 60.66 0.99 2.39 14.52 7.76 22.28

1994 18.74 0.88 60.53 0.97 2.40 23.81 -0.41 23.40

1993 14.09 0.85 57.60 0.94 2.28 13.40 7.67 21.07

1992 18.61 0.89 61.85 0.96 2.16 20.26 1.03 21.29

1991 18.57 0.86 62.11 0.96 2.33 23.16 -0.96 22.20

1990 17.63 0.82 62.47 0.99 2.65 24.85 -1.21 23.64

1989 17.49 0.87 62.96 1.00 2.50 24.74 -0.72 24.02

1988 17.08 0.89 62.28 1.12 2.18 23.88 -0.63 23.25

1987 16.93 0.90 57.95 1.15 2.16 22.38 -0.34 22.04

1986 16.15 0.92 54.86 1.19 2.09 20.47 -0.34 20.13


StockVal®ANHEUSER-BUSCH COMPANIES INC (BUD) Price 51.11994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005


16

20

24 HI 26.4 LO 12.2 ME 18.9 CU 17.5

11-11-199411-12-2004

PRICE / SALES1

2

3HI 3.72 LO 1.32 ME 2.93 CU 2.81

11-11-199411-12-2004

PRE-TAX MARGIN %14

16

18

20 HI 20.4 LO 14.0 ME 16.9 CU 20.2

12-31-199409-30-2004

GROWTH RATE ESTIMATE8

9

10

11 HI 12.00 LO 8.00 ME 10.00 CU 10.00

11-11-199411-12-2004

Valuation Analysis

Valuation AnalysisStockVal®ANHEUSER-BUSCH COMPANIES INC (BUD) Price 51.1

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005


0.8

1.0HI 1.19 LO 0.60 ME 0.91 CU 1.00

11-11-199411-12-2004


1.5

2.0

2.5 HI 2.86 LO 1.13 ME 1.78 CU 2.32

11-11-199411-12-2004


1.8

2.1

2.4 HI 2.51 LO 1.67 ME 2.01 CU 2.39

12-31-199409-30-2004


0.6

0.8

1.0 HI 1.12 LO 0.58 ME 0.77 CU 0.93

11-11-199411-12-2004

Recommendation Sell Anheuser-Busch Issues

Revenues shrinking from year to yearPre-tax margins at all-time high, but price to

sales and price to earnings at median levelsHugely competitive market with Miller, other

brewers

Sysco Corporation

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

SYSCO CORPORATION (SYY)PRICE 35.3 DATE 11-12-2004StockVal® EPS Lagged 1-Year

44

55

6677

99

1111

13131515

1919

2323

2828

3434

41

49

60



1-Day 0.54 -0.37

1-Week 1.06 -0.48

4-Weeks 17.66 10.80

QTD 17.81 11.57

YTD -5.32 -11.82

2003 24.97 -1.41

2002 13.62 36.98

2001 -12.60 0.44 FYE Jun 2004 EPS 1.39


Mean Estimate 1.51 1.73 NE

Change +9% +15%

High 1.56 1.84

Low 1.45 1.61

Total 13 13

# Up 1 1

# Down 9 7

House Estimate

PE Ratio 23.3 20.4 NE







Payout Ratio 34%

Retention Rate 66%


Data Page # 1

Business Analysis Businesses:

Food distributor Supply distributor (plates,

silverware, etc

Main Customers Restaurants Health-care facilities Education facilities

Business: Demand Revenue is increasing from year-to-year

Expected increase in the number of people in healthcare facilities

Growing economy stimulates consumer spending (dining out)

DuPont AnalyticsSYSCO CORPORATION (SYY) StockVal ®

Price 35.250 11/12/04 FYE Jun INT TAX ASSET



------- ------- 1 - ---- ------- ------- ROE Acct ROE


2004 5.27 0.95 61.50 3.97 3.10 38.10 0.00 38.10

2003 5.10 0.95 61.75 4.04 2.99 35.95 0.00 35.95

2002 4.98 0.95 61.75 4.12 2.68 32.12 0.68 32.80

2001 4.77 0.93 61.75 4.32 2.64 31.23 0.64 31.87

2000 4.19 0.91 61.50 4.38 2.83 28.60 1.02 29.62

1999 3.83 0.89 61.00 4.43 2.89 26.63 0.00 26.63

1998 3.86 0.90 61.00 4.25 2.65 21.76 2.06 23.82

1997 3.75 0.91 61.00 4.28 2.35 21.04 0.00 21.04

1996 3.70 0.92 61.00 4.17 2.23 19.24 0.00 19.24

1995 3.76 0.92 60.30 4.10 2.23 19.05 0.00 19.05

1994 3.69 0.91 58.97 4.10 2.25 18.23 0.41 18.64

1993 3.70 0.89 60.79 4.13 2.21 18.40 0.00 18.40

1992 3.65 0.87 61.15 3.95 2.28 17.44 0.00 17.44

1991 3.68 0.84 61.32 3.90 2.47 18.21 0.00 18.21

1990 3.59 0.79 61.30 3.92 2.74 18.74 0.00 18.74

1989 3.44 0.75 61.00 4.74 2.44 18.19 0.00 18.19

1988 3.23 0.91 61.98 4.66 1.88 17.39 -0.37 17.02

1987 3.62 0.92 50.54 4.45 1.92 14.48 0.26 14.74


StockVal®SYSCO CORPORATION (SYY) Price 35.31994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005


20

24

28 HI 31.9 LO 16.8 ME 22.6 CU 22.5

11-11-199411-12-2004

PRICE / SALES0.3

0.6

0.9HI 1.01 LO 0.39 ME 0.64 CU 0.78

11-11-199411-12-2004

NET PROFIT MARGIN ADJUSTED %2.0

2.4

2.8HI 3.1 LO 2.1 ME 2.2 CU 3.1

12-31-199409-30-2004

GROWTH RATE ESTIMATE10.8

12.0

13.2

14.4 HI 15.50 LO 12.00 ME 14.00 CU 15.00

11-11-199411-12-2004

Valuation Analysis

Valuation AnalysisStockVal®SYSCO CORPORATION (SYY) Price 35.3

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005


0.9

1.2HI 1.47 LO 0.73 ME 1.08 CU 1.28

11-11-199411-12-2004


0.4

0.6HI 0.74 LO 0.28 ME 0.45 CU 0.64

11-11-199411-12-2004


0.4

0.5

0.6 HI 0.62 LO 0.40 ME 0.43 CU 0.60

12-31-199409-30-2004


1.0

1.2

1.4 HI 1.40 LO 0.89 ME 1.05 CU 1.40

11-11-199411-12-2004

Recommendation Buy Sysco Corporation Reasons

Growth rate estimates at an all-time high relative to consumer staples sector

Price-to-earnings and price-to-sales do not reflect this expectation

Certain demand increases via healthcare and increased discretionary consumer spending

CVS versus Walgreen Corporation

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

CVS CORPORATION (CVS)PRICE 46.3 DATE 11-12-2004StockVal®

1010

1212

1414

16161818

2222

2626

3030

3434

4040

4646

5454

64

74

86



1-Day -0.39 -1.30

1-Week 0.32 -1.22

4-Weeks 7.17 0.31

QTD 10.02 3.77

YTD 28.32 21.82

2003 44.65 18.27

2002 -15.64 7.72

2001 -50.62 -37.57 FYE Dec 2003 EPS 2.07


Mean Estimate 2.13 2.63 3.01Change +3% +23% +14%

High 2.15 2.75 3.12

Low 2.08 2.55 2.85

Total 16 16 6

# Up 15 12 3

# Down 0 1 0

House Estimate

PE Ratio 21.8 17.6 15.4







Payout Ratio 12%

Retention Rate 88%


Data Page # 1

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

WALGREEN COMPANY (WAG)PRICE 39.2 DATE 11-12-2004StockVal®

33

44

55

6677

99

1212

1515

1818

2323

2929

3636

45

57

71



1-Day 0.54 -0.37

1-Week 1.71 0.17

4-Weeks 9.95 3.09

QTD 9.52 3.27

YTD 7.86 1.36

2003 24.63 -1.75

2002 -13.28 10.09

2001 -19.50 -6.45 FYE Aug 2004 EPS 1.31


Mean Estimate 1.49 1.70 NE

Change +14% +14%

High 1.52 1.77

Low 1.43 1.61

Total 18 15

# Up 11 0

# Down 2 1

House Estimate

PE Ratio 26.3 23.1 NE



Shares Out (Mil) 1,023.5




Payout Ratio 14%

Retention Rate 86%


Data Page # 1

CVS versus Walgreen Business

Walgreen currently largest U.S. Retail Drug Store with 37.5 billion dollars in sales

CVS is second with 22.6 billion dollars in sales

Demand

Increased need for prescription drugs as population continues to grow older

Continued expansion in opening of new stores for both companiesCVS through acquisition (Eckerd from J.C.

Penny)

Dupont - CVSDuPont Analytics

CVS CORPORATION (CVS) StockVal ®

Price 46.350 11/12/04 FYE Dec INT TAX ASSET



------- ------- 1 - ---- ------- ------- ROE Acct ROE


2003 5.38 0.96 61.60 2.63 1.80 15.11 0.00 15.11

2002 5.01 0.95 62.00 2.65 1.87 14.68 0.04 14.72

2001 3.48 0.92 58.23 2.68 1.87 9.32 5.78 15.10

2000 6.61 0.94 60.00 2.64 1.91 18.69 0.51 19.20

1999 6.31 0.94 59.00 2.59 2.06 18.71 0.00 18.71

1998 4.98 0.91 55.64 2.41 2.21 13.43 4.39 17.82

1997 2.01 0.79 35.20 2.29 2.39 3.06 13.61 16.67

1996 6.15 0.88 57.88 1.87 2.54 8.36 3.96 12.32

1995 1.52 2.34 -18.52 25.63 7.11

1994 1.51 3.90

1993 1.36 4.25

1992 5.01

1991 14.26

1990 22.20

1989 23.95

1988 22.40

1987 20.97

1986 20.61

Dupont - WalgreenDuPont Analytics

WALGREEN COMPANY (WAG) StockVal ®

Price 39.240 11/12/04 FYE Aug INT TAX ASSET



------- ------- 1 - ---- ------- ------- ROE Acct ROE


2003 5.82 1.00 62.25 3.05 1.59 17.51 -0.27 17.24

2002 5.74 0.99 62.25 3.07 1.64 17.82 -0.07 17.75

2001 5.85 0.99 62.25 3.09 1.69 18.76 -0.29 18.47

2000 5.98 1.00 61.50 3.26 1.69 20.13 -0.53 19.60

1999 5.78 1.00 60.75 3.30 1.71 19.71 0.00 19.71

1998 5.75 1.00 61.23 3.36 1.74 19.57 0.12 19.69

1997 5.34 1.00 61.24 3.41 1.78 19.75 0.00 19.75

1996 5.17 1.00 61.25 3.42 1.80 19.38 0.00 19.38

1995 5.06 1.00 61.24 3.39 1.82 19.06 0.00 19.06

1994 5.00 0.99 61.50 3.43 1.82 19.10 0.00 19.10

1993 4.90 0.98 61.37 3.42 1.86 16.98 2.20 19.18

1992 4.94 0.96 62.49 3.38 1.91 19.06 0.00 19.06

1991 4.92 0.94 62.49 3.39 1.96 19.23 0.00 19.23

1990 4.96 0.94 62.16 3.40 2.01 19.72 0.00 19.72

1989 4.88 0.93 63.25 3.40 2.06 20.08 0.40 20.48

1988 4.69 0.91 61.77 3.42 2.14 19.34 0.00 19.34

1987 4.96 0.91 53.35 3.37 2.16 17.60 0.39 17.99

1986 5.44 0.94 54.96 3.41 2.07 19.93 0.00 19.93

Valuation – CVS versus Walgreens

CVS WAG Industry

Market Cap: 18.50B 40.34B 285.75M

Employ ees: 110,000 117,000 530

Rev. Growth (ttm): 10.00% 13.30% 13.30%

Revenue (ttm): 29.12B 37.51B 573.99M

Gross Margin (ttm): 26.21% 27.19% 26.21%

EBITDA (ttm): 1.94B 2.14B 11.62M

Oper. Margins (ttm): 5.31% 5.71% 2.27%

Net Income (ttm): 912.60M 1.36B 6.20M

EPS (ttm): 2.233 1.319 0.38

PE (ttm): 20.71 29.93 22.84

PEG (ttm): 1.68 1.7 1.22

PS (ttm): 0.64 1.07 0.66

Recommendation

Sell Walgreen Corporation to acquire CVSMore potential for growth in 2005Retail drug market is expandingLarge acquisition of Eckerd will be more

beneficial in 2005Walgreen Corporation above industry ratios

Questions

Documents

Consumer Staples Company Presentation Chad Hackett Adam Gale