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Large And Mid-Cap Consumer Staples Update Of 3/29/16

Large and Mid-Cap Consumer Staples 03/29/16

The Q1-16 dividend is used for yield calculations. The second Dividend/EPS ratio has the 2016 EPS projection as the denominator. The change in the target, EPS and target is the percentage change in the consensus 2015 projection that has happened since the beginning of 2015. "Div 1 yr" measures the change in the dividend since Q1-15. "Div 5 yr" measures the average change in the dividend since Q1-11. LANC paid a special dividend of $5.00 in Dec of 2015 - special dividends are not included in my stats. PEP has announced a Q2 dividend increase to $0.7525 from $0.7025 - an increase of 7.1%. HRL had a stock split on 2-10-16 - and the split is not yet in the data.


    12-31-15 03-29 Div Current Div/ Div/ Percent Change
Company Price Price /Quarter Yield EPS16 EPS17 Price Pr+Div EPS16 EPS17 Target Div 1yr Div 5yr

Archer-Daniels (NYSE:ADM) 36.68 36.87 0.300 3.25 47% 42% 0.52 1.34 -17.53 -7.67 -16.21 7.14 17.50
Campbell (NYSE:CPB) 52.55 64.17 0.312 1.94 42% 40% 22.11 22.71 4.98 7.17 18.04 0.00 1.52
Coke (NYSE:KO) 42.96 46.48 0.350 3.01 72% 68% 8.19 9.01 -6.28 -7.24 3.35 6.06 9.79
ConAgra (NYSE:CAG) 42.16 44.44 0.250 2.25 45% 41% 5.41 6.00 -1.75 1.25 0.81 0.00 1.74
Colgate (NYSE:CL) 66.62 70.51 0.380 2.16 55% 51% 5.84 6.41 -7.07 -7.14 0.26 5.56 8.68
Clorox (NYSE:CLX) 126.83 128.00 0.770 2.41 63% 59% 0.92 1.53 1.03 0.38 0.76 4.05 8.00
DrP/Snapple (DPS) 93.20 90.02 0.530 2.36 49% 45% -3.41 -2.84 -0.69 -0.64 1.87 10.42 13.13
Flowers (NYSE:FLO) 21.49 18.68 0.145 3.10 57% 53% -13.08 -12.40 -7.34 -11.29 -25.29 9.43 12.62
General Mills (NYSE:GIS) 57.66 62.94 0.440 2.80 61% 58% 9.16 9.92 0.35 -1.29 4.71 7.32 11.43
Hershey (NYSE:HSY) 89.27 91.86 0.583 2.54 54% 50% 2.90 3.55 -1.14 -3.12 -1.92 8.97 13.80
Hormel (NYSE:HRL) 79.08 88.80 0.290 1.31 37% 35% 12.29 12.66 6.85 4.46 13.80 16.00 25.49
Ingredion (NYSE:INGR) 95.84 106.68 0.450 1.69 28% 26% 11.31 11.78 0.16 1.16 5.57 7.14 44.29
Kellogg (NYSE:K) 72.27 76.59 0.500 2.61 54% 50% 5.98 6.67 0.27 0.76 9.57 2.04 4.69
Kimberly-Clark (NYSE:KMB) 127.30 134.99 0.920 2.73 60% 56% 6.04 6.76 -1.29 -3.92 4.94 4.55 6.29
Lancaster (NASDAQ:LANC) 115.46 110.94 0.500 1.80 49% 46% -3.91 -3.48 -2.62 -2.90 -2.06 8.70 10.30
McCormick (NYSE:MKC) 85.56 99.59 0.430 1.73 47% 42% 16.40 16.90 -1.34 -2.86 5.56 7.50 10.71
Pepsi (NASDAQ:PEP) 99.92 101.37 0.703 2.77 60% 56% 1.45 2.15 -3.51 -6.47 0.62 7.25 9.27
Procter&Gamble (NYSE:PG) 79.41 82.80 0.663 3.20 73% 66% 4.27 5.10 -3.20 -4.72 0.37 3.00 7.48
SandersonFarms (NASDAQ:SAFM) 77.52 89.89 0.220 0.98 15% 13% 15.96 16.24 12.73 -1.06 7.96 0.00 5.88
JM Smucker (NYSE:SJM) 123.34 129.98 0.670 2.06 46% 42% 5.38 5.93 -0.35 -1.24 3.06 4.69 10.45
Tyson Foods (NYSE:TSN) 53.33 67.70 0.150 0.89 15% 14% 26.95 27.23 11.11 8.33 26.57 50.00 55.00

Average         2.27 49% 45% 6.70 7.29 -0.79   2.97 -1.90 13.72

The SPY or S&P 500 EFT is 0.61% year to date. - and with unreinvested dividends is 0.61% year to date.
The KXI or Consumer Staples ETF is 3.97% year to date - and with unreinvested dividends is 3.97%.
The RHS or Guggenheim S&P 500 Eq Wt Cons Staple ETF is 4.86% year to date - and with unreinvested dividends is 4.86%.
With the 10 Treasury at 1.78% and the sector average yield on the Q1 dividend at 2.27% - the spread is 49 basis points.
* The change in the dividend is for the last twelve months and not year to date.

Year to date news on under performing stocks:
ADM's 2015 EPS numbers were three cents below projections.
LANC's Q4-15 EPS numbers were ten cents below projections. There were downgrades in the 2016 EPS projection - from $4.20 to the current $4.09.
FLO's Q4-15 EPS numbers were six cents below projections.

Price/Earnings Ratios 03-29-16


  EPS / Share % EPS Growth Price/EPS Current Fiscal Year Year
Co. 2013 2014 2015 2016 2017 13-14 14-15 15-16 16-17 2015 2016 2017 High Low Range End

ADM 2.33 3.20 2.60 2.54 2.89 37.34 -18.75 -2.31 13.78 14.18 14.52 12.76 3.22 2.80 16.15% Dec
CPB 2.64 2.53 2.46 2.95 3.14 -4.17 -2.77 19.92 6.44 26.09 21.75 20.44 2.90 2.77 5.28% July
KO 2.08 2.04 2.00 1.94 2.05 -1.92 -1.96 -3.00 5.67 23.24 23.96 22.67 2.15 1.91 12.00% Dec
CAG 2.16 2.17 2.18 2.24 2.43 0.46 0.46 2.75 8.48 20.39 19.84 18.29 2.41 1.95 21.10% May
CL 2.84 2.93 2.81 2.76 2.99 3.17 -4.10 -1.78 8.33 25.09 25.55 23.58 3.10 2.66 15.66% Dec
CLX 4.31 4.26 4.57 4.92 5.22 -1.16 7.28 7.66 6.10 28.01 26.02 24.52 5.03 4.81 4.81% Dec
DPS 3.20 3.65 4.02 4.30 4.67 14.06 10.14 6.97 8.60 22.39 20.93 19.28 4.50 4.20 7.46% Dec
FLO 0.91 0.88 0.92 1.01 1.10 -3.30 4.55 9.78 8.91 20.30 18.50 16.98 1.15 0.98 18.48% Dec
GIS 2.69 2.82 2.86 2.87 3.05 4.83 1.42 0.35 6.27 22.01 21.93 20.64 2.91 2.83 2.80% May
HSY 3.72 3.98 4.12 4.35 4.65 6.99 3.52 5.58 6.90 22.30 21.12 19.75 4.52 4.25 6.55% Dec
HRL 1.97 2.23 2.64 3.12 3.28 13.20 18.39 18.18 5.13 33.64 28.46 27.07 2.95 2.85 3.79% Dec
INGR 5.05 5.20 5.88 6.40 6.98 2.97 13.08 8.84 9.06 18.14 16.67 15.28 6.50 6.20 5.10% Oct
K 3.77 3.81 3.53 3.70 3.99 1.06 -7.35 4.82 7.84 21.70 20.70 19.20 3.75 3.61 3.97% Dec
KMB 5.77 5.51 5.76 6.10 6.61 -4.51 4.54 5.90 8.36 23.44 22.13 20.42 6.29 6.00 5.03% Dec
LANC 3.98 3.69 3.74 4.09 4.35 -7.29 1.36 9.36 6.36 29.66 27.12 25.50 4.17 4.00 4.55% June
MKC 3.13 3.37 3.48 3.69 4.08 7.67 3.26 6.03 10.57 28.62 26.99 24.41 3.78 3.64 4.02% Nov
PEP 4.37 4.63 4.57 4.68 5.06 5.95 -1.30 2.41 8.12 22.18 21.66 20.03 4.92 4.65 5.91% Dec
PG 4.05 4.09 3.76 3.63 4.04 0.99 -8.07 -3.46 11.29 22.02 22.81 20.50 3.77 3.55 5.85% June
SAFM 5.68 10.80 9.52 6.02 6.53 90.14 -11.85 -36.76 8.47 9.44 14.93 13.77 5.92 4.93 10.40% Oct
SJM 5.37 5.64 5.38 5.77 6.35 5.03 -4.61 7.25 10.05 24.16 22.53 20.47 5.86 5.70 2.97% Apr
TSN 2.22 2.94 3.15 4.00 4.29 32.43 7.14 26.98 7.25 21.49 16.93 15.78 3.84 3.37 14.92% Sep

Average           0.68 4.55 8.19 22.78 21.67 20.06      

The Predictive Power of the Dividend/EPS Ratio on Valuations: Dividend to EPS ratios range from as low as the teens to the 80s - and may look all too random. But this ratio - during most time periods - helps explain the variety of yields and P/E ratios. There is some correlation to YTD price changes as well. This test is done for companies with RRRs under 11%.

The following stocks had Q1-16 Dividend/EPS ratios of less than 45%: CPB, CAG, HRL, INGR, SAFM and TSN. Their YTD mean price gain = 15.67% and 5 of the 6 beat the sector mean yearly price gain of 6.7%. Their mean yield = 1.51% and they had an average price/earnings ratio = 19.76. Their mean LTM dividend growth = 12.19% and they had an average CAGR projection of 6.96.

The following had Q1-16 Dividend/EPS ratios of more than 45% - but less than 52%: DPS, LANC, MKC and SJM. Their YTD mean price gain = 3.61% and 1 of the 4 beat the sector mean yearly price gain. Their mean yield = 1.99% - and they sold at an average price/earnings ratio = 24.39. Their mean LTM dividend growth = 7.82% and they had an average CAGR projection of 7.06.

The following companies had Q1-16 Dividend/EPS ratios of more than 52%: KO, CL, CLX, FLO, GIS, HSY, K, KMB, PEP and PG. Their YTD mean price gain = 3.17% and 2 of the 10 beat the sector mean yearly price gain. Their mean yield = 2.73% - and they sold at an average price/earnings ratio of 22.44. Their mean LTM dividend growth = 5.82% and they had an average CAGR projection of 6.19.

The relationship between CAGR projections and yields: While yields can be influenced by risk, the influence of dividend growth projections can be seen.
The following had CAGR projections over 8.5%: FLO, HSY, HRL, INGR and TSN. Their current average yield is 1.90%.
The following had CAGR projections under 8.5% but over 6.5%: ADM, DPS, LANC, MKC and SJM. Their current average yield is 2.24%.
The following had CAGR projections under 6.5%: CPB, KO, CAG, CLX, GIS, K, KMB, PEP and SAFM. Their current average yield is 2.39%.

Evidence that it is a suboptimal time to buy:

Historical yields for the sector:

Mar 2010: 2.77% June: 2.92% Sept: 2.92% Dec: 2.78%
Mar 2011: 2.84% June: 2.76% Sept: 2.94% Dec: 2.81%
Mar 2012: 2.81% June: 2.82% Sept: 2.80% Dec: 2.81%
Mar 2013: 2.42% June: 2.47% Sept: 2.58% Dec: 2.48%
Mar 2014: 2.53% June: 2.54% Sept: 2.61% Dec: 2.47%
Mar 2015: 2.52% June: 2.61% Sept: 2.58% Dec: 2.33%
Mar 2016: 2.27% June: Sept: Dec:

Historical P/E Ratios for the sector:

Mar 2010: 14.74 June: 13.84 Sept: 14.45 Dec: 15.93
Mar 2011: 15.55 June: 16.38 Sept: 15.52 Dec: 16.58
Mar 2012: 16.57 June: 16.64 Sept: 17.15 Dec: 17.45
Mar 2013: 18.94 June: 18.56 Sept: 18.41 Dec: 19.87
Mar 2014: 18.77 June: 19.31 Sept: 19.23 Dec: 20.55
Mar 2015: 20.55 June: 20.21 Sept: 19.45 Dec: 21.44
Mar 2016: 21.67 June: Sept: Dec:

Disclosure: I am/we are long CL, GIS, HRL, HSY, INGR, PEP, PG, SJM.