IOI valued PG in May 2016 and the most recent 10-K looks promising, but the results are “in” the share price.
When we completed our valuation project on Procter and Gamble (PG) in May 2016, we knew their fiscal year end was coming up and that more data would be available on the company soon. For an IOI investor, since we have a valuation “roadmap” already in place, the most important step is to look at new data – like the full year 10-K (released August 9, 2016) and see how the data and commentary match up with our range of values approach. From there we can determine if the investment idea has improved or deteriorated based on the current stock price’s relationship to our valuation range.
This note takes a quick look at the full FY2016 results relative to IOI’s projections and then utilizes the data from the Management Discussion and Analysis (MD&A) section of the 10-K combined with the FY2016 Results Conference Call to see what changes, if any, we might make to our valuation thinking on our key drivers of growth and performance:
- Owners Cash Profits (calculated as Cash From Operations less the cost to keep the current business running)
- Investment Efficacy
- Free Cash Flow to Owners