BirayNetworks Article Website

	BirayNetworks Article Website Gathering New Information about Stocks, Health, and Sports

List of Articles Stocks and Investing Stocks I Own Stock Advice Weight Loss and Fitness Sports Donate Back to Home	A Financial Analysis of Alberto-Culver Introduction Alberto-Culver Company (ACV) is an $2.72 billion company in the personal & household industry. Market capitalization competitors in this industry include Herbalife, Church & Dwight, and Tupperware Brands. The personal & household industry is down 9.39% over the past year compared to the S&P 500 which is down 10.35% during the same period. Over the past month, the industry has been up 0.38%, while the S&P 500 has been down -4.65%. Strong technical trends may be indicative of a continued expansion in this industry. Evidence comes from a potential turnaround in general equities. Moreover, as there seems to be evidence of confidence in equities, noncyclical stocks like Alberto-Culver will see future benefits. Also Alberto-Culver's growth and valuation illustrate the potential for a strong earnings report next quarter. Business This section describes what Alberto-Culver produces. According to Reuters, Alberto-Culver, “operates through two main business segments: Consumer Packaged Goods and Cederroth International. Both segments are involved in developing, manufacturing, and distributing beauty and branded food to customers. However, packaged goods is America focused, while Cedderroth focuses on Scandinavia and other parts of Europe. Some specific products that the company produces included TRESemme, Nexxus, and Alberto VO5. There are also some food related products that include Molly McButter sprinkles and SugarTwin sugar substitute. What is also interesting is the Alberto-Culver also operates overseas. Both in South America and in Europe, Alberto-Culver takes advantage of the cheap dollar to see excess returns on its products. While the products are essentially the same, the names differ a bit in terms of offering, Savett we wipes, Bliw liquid soaps, and Family Fresh shampoo. Therefore, Alberto-Culver offers a diverse range of products to a wide vast of customers. Growth Alberto-Culver has illustrated solid growth prospects over the past year. According to Reuters, Alberto-Culver reported a $1.54 billion revenue product last year. This number is up over 11.31% than it was the previous year. Compared to the industry’s average of 2.54%, investors see the relative strength compared to other competitors. This number is better than the company’s five year average of -10.28%. Moreover, competitor annual averages of 11.99% (Church) and -0.22% (Altera) are lower than Alberto-Culver’s current figures. Alberto-Culver's earnings grew at a strong 54.13% last year—a number much higher than the industry average and competitor averages. Competitors such as Tupperware only saw a 29.17% fall and Church saw a disappointing increase in earnings of 21.98%. Therefore, both earnings and revenue growth is strong for Alberto-Culver. In addition, Alberto-Culver has kept its costs under control. According to Reuters, Alberto-Culver has reported gross, operating, and net profit margins of 52.63%, 9.67%, and 7.24% respectively over the past year. Moreover, these numbers are above the industry averages of 14.82%, 4.82%, and 3.24%, respectively. The numbers are also above or near the company’s five year average respective numbers of 50.27%, 8.04%, and 5.16%. This comparison illustrates a history of strong cost controls and positively-related consistency. The current averages are also better (business model respected) than competitor Tupperware's respective operating and net income averages of 7.49%, and 6.26%. The same comparison can be made for Church and Herbalife. Therefore, Alberto-Culver has proved to be a solid company in this industry. Its services are well-controlled cost wise, especially to direct market-cap competitors. Compiling all this information together and investors comes across ROE. Over the past year, Alberto-Culver reported an ROE of 11.74%. Therefore, out of all shareholder equity, more than 12% (above five year average of 8.11%) come from earnings instead of debt or stock. This number is much stronger compared to the industry average of 8.77%, and the number is better than some competitor averages 17.53% (Church) and 9.64% (Herbalife). Therefore, Alberto-Culver has a history of strong earnings per its equity share—which reflects the strong capital gain movement over the past year. And if history is any indication, there should be no reason why Alberto cannot continue its success. The same logic applies to Alberto-Culver’s 7.81% ROA (above industry average) 10.17% ROI (above industry average). Valuation With fairly high growth estimates and historical data, there should be evidence of an overvalued company. However, this is not strictly the case. Alberto-Culver has a forward P/E ratio of 21.83 and a price to sales ratio of 1.67 compared to the industry’s respective 5.45 and 0.62, which shows a relatively undervalued status. In comparison, the rest of the market cap competitors have ratios that higher than Alberto-Culver. Church has a forward price to earnings ratio of 21.04 and price to sales ratio of 1.62. What makes Alberto-Culver’s figures are more enticing is these competing firms aren’t growing so greatly as strongly as Alberto-Culver. Alberto-Culver can now be seen as both a growing and valued company. Moreover, Alberto-Culver has a relatively low PEG (1.76) ratio compared to other competitors’ numbers as well. Efficiency Alberto-Culver is efficient. Inventory turnover at 3.80 is strong compared to other industry market-cap rivals (Tupperware). Moreover, asset turnover is also strong at 1.08 compared to competitor figures. Receivables turnover were at 6.27, but cash is not an issue for Alberto-Culver. In terms of liquidation, Alberto-Culver current ratio is at 2.16. This number is a bit risky, but the company’s capital expenditures have increased (1.54%) which means further increases in capacity and economies of scale may be present in the future, because of this financing. Moreover, institutions own 92.48% of all Alberto-Culver shares. Since the institutional investors have a larger gross amount of capital to lose compared to the retail investor, a high institutional percentage illustrates confidence in the stock's ability. There is also a dividend rate of 0.97% which is above the industry average of 0.49%. Technical Analysis Alberto-Culver performed flat in the past year. The company’s share price has increased 7.93% year-to-year. This type of growth is good for a recessionary-type economy, especially considering the fact that the housing market and construction is doing so poorly. There seems to be some support at the 25 dollar share price range dating back to late April 2008. The last time Alberto-Culver reached this amount the company rebounded and appreciated 5%. There is a possibility a similar or better situation could occur in the future. More specific to the current month, Alberto-Culver illustrates strong technical signals. Parabolic SAR is below and upward trending the current share price. This event usually signals an upturn in share price. The company is a little undervalued compared to the RSI index at 43.12, but it is better to be an advocate of fundamental valuations before technical valuations. Therefore, while now isn't the most ideal time to purchase shares of Alberto-Culver according to technical analysis, purchasing shares will still produce strong long terms gains. Conclusion Alberto-Culver is a great acquisition for any portfolio. The company's business model and fundamental analysis are both strong. It is very rare to find a company that has both strong valuation and growth, so it is wise to take advantage of these situations as they arise. -Dennis Biray June 13th, 2008 ©2008 BirayNetworks. All Rights Reserved

List of
Articles

Stocks and Investing

Stocks I Own

Stock Advice

Weight Loss and Fitness

Sports

Donate

Back to Home

A Financial Analysis of Alberto-Culver

Introduction

Alberto-Culver Company (ACV) is an $2.72 billion company in the personal & household industry. Market capitalization competitors in this industry include Herbalife, Church & Dwight, and Tupperware Brands. The personal & household industry is down 9.39% over the past year compared to the S&P 500 which is down 10.35% during the same period. Over the past month, the industry has been up 0.38%, while the S&P 500 has been down -4.65%. Strong technical trends may be indicative of a continued expansion in this industry. Evidence comes from a potential turnaround in general equities. Moreover, as there seems to be evidence of confidence in equities, noncyclical stocks like Alberto-Culver will see future benefits. Also Alberto-Culver's growth and valuation illustrate the potential for a strong earnings report next quarter.

Business

This section describes what Alberto-Culver produces. According to Reuters, Alberto-Culver, “operates through two main business segments: Consumer Packaged Goods and Cederroth International. Both segments are involved in developing, manufacturing, and distributing beauty and branded food to customers. However, packaged goods is America focused, while Cedderroth focuses on Scandinavia and other parts of Europe. Some specific products that the company produces included TRESemme, Nexxus, and Alberto VO5. There are also some food related products that include Molly McButter sprinkles and SugarTwin sugar substitute.

What is also interesting is the Alberto-Culver also operates overseas. Both in South America and in Europe, Alberto-Culver takes advantage of the cheap dollar to see excess returns on its products. While the products are essentially the same, the names differ a bit in terms of offering, Savett we wipes, Bliw liquid soaps, and Family Fresh shampoo. Therefore, Alberto-Culver offers a diverse range of products to a wide vast of customers.

Growth

Alberto-Culver has illustrated solid growth prospects over the past year. According to Reuters, Alberto-Culver reported a $1.54 billion revenue product last year. This number is up over 11.31% than it was the previous year. Compared to the industry’s average of 2.54%, investors see the relative strength compared to other competitors. This number is better than the company’s five year average of -10.28%. Moreover, competitor annual averages of 11.99% (Church) and -0.22% (Altera) are lower than Alberto-Culver’s current figures. Alberto-Culver's earnings grew at a strong 54.13% last year—a number much higher than the industry average and competitor averages. Competitors such as Tupperware only saw a 29.17% fall and Church saw a disappointing increase in earnings of 21.98%. Therefore, both earnings and revenue growth is strong for Alberto-Culver.

In addition, Alberto-Culver has kept its costs under control. According to Reuters, Alberto-Culver has reported gross, operating, and net profit margins of 52.63%, 9.67%, and 7.24% respectively over the past year. Moreover, these numbers are above the industry averages of 14.82%, 4.82%, and 3.24%, respectively. The numbers are also above or near the company’s five year average respective numbers of 50.27%, 8.04%, and 5.16%. This comparison illustrates a history of strong cost controls and positively-related consistency. The current averages are also better (business model respected) than competitor Tupperware's respective operating and net income averages of 7.49%, and 6.26%. The same comparison can be made for Church and Herbalife. Therefore, Alberto-Culver has proved to be a solid company in this industry. Its services are well-controlled cost wise, especially to direct market-cap competitors.

Compiling all this information together and investors comes across ROE. Over the past year, Alberto-Culver reported an ROE of 11.74%. Therefore, out of all shareholder equity, more than 12% (above five year average of 8.11%) come from earnings instead of debt or stock. This number is much stronger compared to the industry average of 8.77%, and the number is better than some competitor averages 17.53% (Church) and 9.64% (Herbalife). Therefore, Alberto-Culver has a history of strong earnings per its equity share—which reflects the strong capital gain movement over the past year. And if history is any indication, there should be no reason why Alberto cannot continue its success. The same logic applies to Alberto-Culver’s 7.81% ROA (above industry average) 10.17% ROI (above industry average).

Valuation

With fairly high growth estimates and historical data, there should be evidence of an overvalued company. However, this is not strictly the case. Alberto-Culver has a forward P/E ratio of 21.83 and a price to sales ratio of 1.67 compared to the industry’s respective 5.45 and 0.62, which shows a relatively undervalued status. In comparison, the rest of the market cap competitors have ratios that higher than Alberto-Culver. Church has a forward price to earnings ratio of 21.04 and price to sales ratio of 1.62. What makes Alberto-Culver’s figures are more enticing is these competing firms aren’t growing so greatly as strongly as Alberto-Culver. Alberto-Culver can now be seen as both a growing and valued company. Moreover, Alberto-Culver has a relatively low PEG (1.76) ratio compared to other competitors’ numbers as well.

Efficiency

Alberto-Culver is efficient. Inventory turnover at 3.80 is strong compared to other industry market-cap rivals (Tupperware). Moreover, asset turnover is also strong at 1.08 compared to competitor figures. Receivables turnover were at 6.27, but cash is not an issue for Alberto-Culver. In terms of liquidation, Alberto-Culver current ratio is at 2.16. This number is a bit risky, but the company’s capital expenditures have increased (1.54%) which means further increases in capacity and economies of scale may be present in the future, because of this financing. Moreover, institutions own 92.48% of all Alberto-Culver shares. Since the institutional investors have a larger gross amount of capital to lose compared to the retail investor, a high institutional percentage illustrates confidence in the stock's ability. There is also a dividend rate of 0.97% which is above the industry average of 0.49%.

Technical Analysis

Alberto-Culver performed flat in the past year. The company’s share price has increased 7.93% year-to-year. This type of growth is good for a recessionary-type economy, especially considering the fact that the housing market and construction is doing so poorly. There seems to be some support at the 25 dollar share price range dating back to late April 2008. The last time Alberto-Culver reached this amount the company rebounded and appreciated 5%. There is a possibility a similar or better situation could occur in the future.

More specific to the current month, Alberto-Culver illustrates strong technical signals. Parabolic SAR is below and upward trending the current share price. This event usually signals an upturn in share price. The company is a little undervalued compared to the RSI index at 43.12, but it is better to be an advocate of fundamental valuations before technical valuations. Therefore, while now isn't the most ideal time to purchase shares of Alberto-Culver according to technical analysis, purchasing shares will still produce strong long terms gains.

Conclusion

Alberto-Culver is a great acquisition for any portfolio. The company's business model and fundamental analysis are both strong. It is very rare to find a company that has both strong valuation and growth, so it is wise to take advantage of these situations as they arise.

-Dennis Biray
June 13th, 2008