This past month I took a look at the Confectioners Industry, including candy giants Hershey, Tootsie Roll, Nestle, and a micro-cap chocolate maker, Rocky Mountain Chocolate Factory. This table highlights the important metrics of each company, for easy comparison.
If you missed any of the analysis posts, check them out
Rocky Mountain Chocolate Factory
*Unless otherwise stated, all growth rates and averages are based on a 10 year history
| Hershey (HSY) | Tootsie Roll (TR) | Nestle (NSRGY.PK) | Rocky Mountain Chocolate Factory (RMCF) | |
|---|---|---|---|---|
| Revenue Growth | 3.5% | 1.7% | 2.9% | 2.6% |
| Avg. Gross Margin | 37.7% | 40.4% | 57.6% | 49.8% |
| Operating Margins | 15.4% | 19.9% | 13.3% | 19.1% |
| Net Margin | 8.8% | 14.1% | 13.3% | 11.7% |
| Dividend Growth | 9.1% | 3.2% | 12.4% | N/A |
| EPS Growth | 13.1% | (4.8)% | 21.5% | N/A |
| FCF Growth | N/A | (2.5%) | 6.7% | 10.3% |
| Payout Ratio | 58% | 24% | 18% | 69% |
| Cash Payout Ratio | N/A | 33% | 74.1% | 49.3% |
| Current Ratio | 1.5 | 3.8 | 1.3 | 3.7 |
| Total Debt / Equity | 2 | .01 | .32 | 0 |
| Avg. Return on Equity | 43.9% | 11.3% | 24.9% | 25.7% |
| Avg. Cash Return on Capital | 16.5% | 10% | 16.1% | 27.5% |
| 5 Year Avg. Low p/e | 23.5 | 23 | 16.5 | 12.1 |
| Current p/e (ttm) | 22.9 | 29.7 | 5.6 | 17.7 |
| Current p/e (forward) | 18.2 | 29.7 | 15.9 | N/A |
It seems there are better businesses out there than candy makers. Nestle is the strongest company of the group, and if I had to choose one, this would be it. But as I stated in my analysis, my inadequate knowledge of investing in a foreign dividend paying company will keep me on the sidelines. Plus, there are better businesses here at home.
Rocky Mountain Chocolate Factory did catch my eye, and will stay on my watchlist for the next few years. If they can accelerate growth and maintain a generous dividend policy, I might add a small position.
Full Disclosure: I have no position in the stocks mentioned. My Current Portfolio Holdings can be seen here
7 Comments
I seriously need to follow Nestle closely! They look very attractive at least from the numbers – thanks for putting together the table!
Nestle is a great icon, with even better years ahead. Incidently, some of their employees speak very highly of the company and its future. Also, to add to your table, the dividend is 2.5%.