Some of the largest companies in the S&P 500 operate in the consumer staples sector, and it was reported yesterday that Wal-Mart (NYSE:WMT), Philip Morris (NYSE:PM) and Procter & Gamble (NYSE:PG) were among the top 20 companies with the biggest buybacks in Q4 2012.
With over $99.15 billion repurchased by all 500 companies, these three accounted for 6%. In addition to the buybacks, WMT, PM and PG all offer shareholders a nice dividend yield for a larger than average shareholder return.
Share repurchases help return value to investors by increasing each share's stake in the company. Below is a fundamental analysis with highlights of these three shareholder conscious companies for investors looking for value in the Consumer Staple sector:
Wal-Mart has a market cap of $250.16 billion and bought back $2.943 billion in the fourth quarter of 2012. At its current price of $74.62, shares are up 10% YTD and just 2% off of their 52 week highs. Analysts have a mean target price of $78.89 on the shares with a median target price of $80.00.
Positives for Wal-Mart
- P/E of 14.9, P/B of 3.2 and P/S of 0.5 are all below the industry averages 18.0, 3.4 and 0.6 respectfully.
- Net margins of 3.6% and ROE of 23.0 are both above the industry averages 3.4% and 20.8 respectfully.
- On $469.162 billion in sales last year, Wal-Mart produced $25.5 billion in cash from operations (5%).
- Dividend yield of 2.22%.
In 7th of the top 20 biggest buybacks of the S&P 500 was Philip Morris who bought back $1.968 billion in shares during the fourth quarter of 2012. Philip Morris International has a market cap of $151.6 billion and shares currently trade for $92.28. Shares are up 11% YTD and only 0.5% off their 52 week highs.
Positives for Philip Morris
- P/S of 2.0 is below the industry averages 2.3.
- Analyst have a mean target price of $97.26 per share and a median target price per share of $96.0 (both above current market price of $92.28).
- On revenues of $77.3 billion last year, PM generated $9.4 billion in cash from operations (12%).
- Dividend yield of 3.61%.
Proctor & Gamble Co. has a market cap of $210.5 billion and repurchased $1.4 billion in shares during the fourth quarter of 2012. At $76.99, shares are up 14% YTD and just 1% off their 52 week highs. Analyst have a mean price target of $80.22 and median target price of $80.00 on the shares.
Positives for PG
- P/E of 19.8, P/B of 3.2 and D/E of 0.4 are all below the industry averages 20.2, 4.4 and 0.5 respectfully.
- Operating margins of 15.5% are above the industry's 9.9%.
- On revenues of $83 billion, PG produced $13.28 billion in cash from operating activities (16%).
- Dividend yield of 2.92%.
Top Energy Buybacks can be found here.
Top Financial Buybacks can be found here.
Investors have to like the massive amounts of money these companies are producing and especially more because they are returning a large amount directly to investors. In addition to purchasing shares directly, a more diversified investment can be made by purchasing the following ETF that has all 3 companies as one of its top 10 largest individual holdings:
- Consumer Staples Select Sector SPDR (NYSEARCA:XLP)