>>> Kroger to pay $68 million to settle West Virginia opioid claims
by By Brendan Pierson
(Reuters) -The Kroger Co has agreed to pay West Virginia $68 million to settle claims that it fueled the opioid epidemic through lax oversight of its pill sales, bringing the state's years-long litigation over the opioid crisis to a close.
The deal, announced Thursday by West Virginia Attorney General Patrick Morrisey, comes a month before the grocery store had been set to go to trial against the state. All other companies sued by the state over opioids had already settled.
"This is an important day for West Virginia," Morrisey said. "This is a day of healing."
Morrisey also touted the state's framework for spending the funds on fighting the opioid epidemic, in which 72.5 percent will go to a newly created foundation, overseen by a board chosen by the governor and by local governments. Most of the remainder will go to local governments.
He said the framework would ensure that the money is spent well and does not disappear into a "black hole."
A Kroger spokesperson said in an email that the company believes the lawsuit is without merit, but that the settlement was the "best path forward to resolve this litigation."
West Virginia, which has opted out of nationwide opioid settlements totaling more than $50 billion in order to pursue cases on its own, has now secured approximately $1 billion from drugmakers, distributors and pharmacies, Morrisey said, a larger amount per capita than any other state.
West Virginia had the highest drug overdose death rate of any state in 2021, according to the U.S. Centers for Disease Control and Prevention.
Thousands of lawsuits have been filed by states, local governments and Native American tribes over opioids, accusing drug companies of downplaying opioids' risks and distributors and pharmacies of ignoring red flags that they were being trafficked illegally.
>>> Yum! Brands Reports First-Quarter Results
May 3, 2023
Broad-Based Global Strength Resulting in 13% System Sales Growth excluding Russia Impact;
8% Same-Store Sales Growth and Record Digital System Sales With Digital Mix Exceeding 45%
LOUISVILLE, Ky., May 03, 2023--(BUSINESS WIRE)--Yum! Brands, Inc. (NYSE: YUM) today reported results for the first-quarter ending March 31, 2023. Worldwide system sales excluding foreign currency translation grew 13% excluding Russia impact, with 8% same-store sales growth and 5% unit growth. First-quarter GAAP operating profit grew 3%. First-quarter core operating profit grew 11% including a 1 percentage point headwind from Russia. First-quarter GAAP EPS was $1.05 and first-quarter EPS excluding Special Items was $1.06. First-quarter EPS includes a negative $0.07 mark-to-market impact from unrealized investment losses and a negative $0.08 impact from foreign currency translation.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230502005939/en/
DAVID GIBBS COMMENTS
David Gibbs, CEO, said "Our first-quarter results continue to illustrate the power of our global portfolio and the advantages of our business model. The demand for our iconic brands is evident as our incredible teams and franchise partners delivered another strong quarter with system sales growth of 13% excluding Russia, driven by 8% same-store sales growth and continued development momentum. We're seeing broad-based accelerating digital sales growth leading to a record quarter for both digital system sales of nearly $7 billion and digital sales mix that exceeded 45%. I’m pleased to see the revenue flow through in the quarter translate to 11% core operating profit growth. We're proud of the strong start to the year and confident we'll continue to build on our position as the global franchisor of choice."
On April 17, 2023, Yum! Brands completed its exit from the Russian market by selling its KFC business in Russia to Smart Service Ltd., including all Russian KFC restaurants, operating system, master franchise rights and the trademark for the Rostik's brand. With the completion of the transaction, we have now ceased our corporate presence in Russia.
As of the beginning of the second quarter 2022, we elected to remove Russia from our unit count and system sales, negatively impacting those key performance metrics as presented in our FIRST-QUARTER HIGHLIGHTS section and the remainder of this release.
Worldwide system sales grew 11%, excluding foreign currency translation, with KFC at 11%, Taco Bell at 12% and Pizza Hut 10%.
System sales growth figures exclude foreign currency translation ("F/X") and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further details.
Digital system sales includes all transactions where consumers at system restaurants utilize ordering interaction that is primarily facilitated by automated technology.
Removing Russia from our first-quarter results negatively impacted KFC International system sales growth by 5 percentage points and KFC Division operating profit growth excluding foreign currency by 2 percentage points.
HABIT BURGER GRILL DIVISION
The Habit Burger Grill Division system sales grew 8% with flat same-store sales growth.
The Habit Burger Grill Division opened 11 gross new restaurants in the U.S. and Cambodia.
Disclosures pertaining to outstanding debt in our Restricted Group capital structure will be provided at the time of the filing of the first-quarter Form 10-Q.
Yum! Brands, Inc., based in Louisville, Kentucky, and its subsidiaries franchise or operate a system of over 55,000 restaurants in more than 155 countries and territories under the company’s concepts – KFC, Taco Bell, Pizza Hut and the Habit Burger Grill. The Company's KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-style food, and pizza categories, respectively. The Habit Burger Grill is a fast casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. In 2023, the KFC, Taco Bell and Pizza Hut brands were ranked in the top five of Entrepreneur’s Top Global Franchises Ranking. In addition, in 2023 Yum! Brands was included on the Bloomberg Gender-Equality Index; Forbes’ list of America’s Best Employers for Diversity; and Newsweek’s lists recognizing America’s Most Responsible Companies, America’s Greatest Workplaces for Diversity and America’s Greatest Workplaces for Women. In 2022, the Company was named to the Dow Jones Sustainability Index North America.
>>> Clorox Reports Q3 Fiscal Year 2023 Results, Updates Outlook
May 2, 2023
OAKLAND, Calif., May 2, 2023 /PRNewswire/ -- The Clorox Company (NYSE: CLX) today reported results for the third quarter of fiscal year 2023, which ended March 31, 2023.
Third-Quarter Fiscal Year 2023 Summary
Following is a summary of key third-quarter results. All comparisons are with the third quarter of fiscal year 2022 unless otherwise stated.
Net sales increased 6% to $1.91 billion compared to a 2% net sales increase in the year-ago quarter. The net sales increase was driven largely by favorable price mix, partially offset by lower volume. Organic sales1 were up 8%.
Gross margin increased 590 basis points to 41.8% from 35.9% in the year-ago quarter, due to the benefits of pricing and cost savings initiatives, partially offset by unfavorable commodity costs, and higher manufacturing and logistics expenses.
Diluted net earnings per share (diluted EPS) decreased 241% to a loss of $1.71 from $1.21 in the year-ago quarter. This decrease includes a noncash impairment charge of $445 million ($362 million after tax or $2.92) in the Vitamins, Minerals and Supplements business and continued investments in the company's long-term strategic digital capabilities and productivity enhancements (17 cents) as well as the implementation of the company's streamlined operating model (13 cents).
Adjusted EPS1 increased 15% to $1.51 from $1.31 in the year-ago quarter, due in part to the net benefits of pricing and cost savings, partially offset by higher selling and administrative expenses, advertising investments and unfavorable commodity costs.
Year-to-date net cash provided by operations was $728 million compared to $451 million in the year-ago period, representing a 61% increase.
"Our strong results this quarter reflect solid execution against our priorities to rebuild margin and drive top-line growth amid a challenging operating environment," said CEO Linda Rendle. "We continue to take a broad set of actions to address persistent cost inflation, including pricing and cost savings efforts. At the same time, we remain committed to investing in our advantaged portfolio of leading brands, innovation pipeline, digital transformation and streamlined operating model to create a stronger, more resilient company. These strategic choices, supported by the superior value our brands offer consumers and the steps we've taken to further position our business for long-term, profitable growth, are working as planned and support our decision to raise our fiscal year 2023 outlook."
This press release includes certain non-GAAP financial measures. See "Non-GAAP Financial Information" at the end of this press release for more details.
1 Organic sales growth / (decrease), adjusted EPS and segment pretax earnings increase / (decrease) excluding the noncash impairment charge are non-GAAP measures. See Non-GAAP Financial Information at the end of this press release for reconciliations to the most comparable GAAP measures.
Strategic and Operational Highlights
The following are recent highlights of business and environmental, social and governance achievements:
Delivered organic sales growth in all four segments, supported by improved service levels, including the highest case fill rates since the start of the pandemic.
Achieved two consecutive quarters of gross margin expansion, supported by cost-justified pricing and decade-high cost savings.
Reduced inventory for the fifth quarter in a row, contributing to the 61% growth in cash from operations fiscal year to date.
Continued to implement the company's streamlined operating model, which is increasing efficiency and moving decision-making to those who are closer to consumers to better anticipate and meet their needs.
Ranked No. 1 on Barron's 2023 100 Most Sustainable U.S. Companies list.
Launched new product innovations through third-party partnerships in Burt's Bees and Glad that deliver improved sustainability benefits without sacrificing quality.
Expanded industry leadership in product transparency by listing ingredients on all Clorox SmartLabel cleaning product pages.
Key Segment Results
The following is a summary of key third-quarter results by reportable segment. All comparisons are with the third quarter of fiscal year 2022, unless otherwise stated.
Health and Wellness (Cleaning; Professional Products; Vitamins, Minerals and Supplements)
Net sales increased 7%, with 23 points of favorable price mix more than offsetting 16 points of lower volume.
Segment pretax earnings decreased 445%, primarily behind the noncash impairment charge in the VMS business, unfavorable commodity costs and advertising investments, partially offset by net sales growth primarily behind pricing as well as the benefit of cost savings. Excluding the noncash impairment charge, segment pretax earnings1 increased 70%.
Household (Bags and Wraps; Grilling; Cat Litter)
Net sales increased 2%, with 14 points of favorable price mix offsetting 12 points of lower volume.
Segment pretax earnings increased 8%, primarily due to higher net sales due to pricing and the benefit of cost savings, partially offset by advertising investments and unfavorable commodity costs.
Lifestyle (Food; Natural Personal Care; Water Filtration)
Net sales increased 15% behind favorable price mix.
Segment pretax earnings increased 26%, mainly due to higher net sales primarily behind pricing as well as the benefit of cost savings, partially offset by advertising investments and unfavorable commodity costs.
International (Sales Outside the U.S.)
Net sales increased 1%, with 21 points of favorable price mix more than offsetting 13 points of unfavorable foreign exchange rates and 7 points of lower volume. Organic sales1 growth was 14%.
Segment pretax earnings decreased 52% largely behind unfavorable foreign exchange rates, the noncash impairment charge in the VMS business, and higher manufacturing and logistics costs, partially offset by net sales growth primarily behind pricing as well as the benefit of cost savings. Excluding the noncash impairment charge, segment pretax earnings1 decreased 13%.
Fiscal Year 2023 Outlook
The company is updating the following elements of its fiscal year 2023 outlook:
Net sales are now expected to be between a 1% and 2% increase, compared previously to between a 2% decrease and 1% increase. Organic sales are now expected to be between a 3% and 4% increase, compared previously to between a flat and 3% increase.
Gross margin is now expected to increase between 250 and 300 basis points, primarily due to the combined benefit of pricing, cost savings and supply chain optimization, more than offsetting continued cost inflation. This compares previously to an increase of about 200 basis points.
Selling and administrative expenses are now expected to be about 16% of net sales, including about 1.5 points of impact from the company's strategic investments in digital capabilities and productivity enhancements. This compares previously to between 15% and 16% of net sales.
Effective tax rate is now expected to be about 37%, reflecting the impact from the impairment charge in the VMS business. This compares previously to about 24%. Excluding the impact from the VMS impairment charge, the adjusted effective tax rate is expected to be about 24%.
Diluted EPS is now expected to be between $0.45 and $0.60, or an 88% to 84% decrease, respectively. This compares previously to between $3.20 and $3.45, or a 14% to 8% decrease, respectively.
Adjusted EPS is now expected to be between $4.35 and $4.50, or a 6% to 10% increase, respectively. This compares previously to between $4.05 and $4.30, or a 1% decrease to a 5% increase, respectively. To provide greater visibility into the underlying operating performance of the business, adjusted EPS outlook excludes the noncash impairment charge of $2.92 related to the VMS business, the long-term strategic investment in digital capabilities and productivity enhancements, estimated to be about 63 cents, compared previously to approximately 55 cents, as well as the company's streamlined operating model, which is now estimated to be about 35 cents, compared previously to approximately 30 cents. While overall expectations for the streamlined operating model program remain unchanged, with $75 to $100 million in ongoing annual savings and $75 to $100 million in one-time costs over fiscal years 2023 and 2024, the timing of charges has been adjusted as plans continue to be refined. Savings for fiscal year 2023 are now expected to be about $35 million compared previously to approximately $25 million.
The company is confirming the following elements of its fiscal year 2023 outlook:
Foreign exchange headwinds continue to represent about a 2-point reduction in sales.
Advertising and sales promotion spending of about 10% of net sales, reflecting the company's ongoing commitment to invest in its brands.
About The Clorox Company
The Clorox Company (NYSE: CLX) champions people to be well and thrive every single day. Its trusted brands, which include Brita®, Burt's Bees®, Clorox®, Fresh Step®, Glad®, Hidden Valley®, Kingsford®, Liquid-Plumr®, Pine-Sol® and Rainbow Light®, can be found in about nine of 10 U.S. homes and internationally with brands such as Ajudin®, Clorinda®, Chux® and Poett®. Headquartered in Oakland, California, since 1913, Clorox was one of the first U.S. companies to integrate ESG into its business reporting, with commitments in three areas: Healthy Lives, Clean World and Thriving Communities. Visit thecloroxcompany.com to learn more.
>>> Coca-Cola gets a lift from higher prices, steady demand
April 24, 2023
By Ananya Mariam Rajesh
(Reuters) -Coca-Cola Co on Monday topped Wall Street estimates for first-quarter revenue and profit, benefiting from resilient demand for its sodas as well as multiple price increases undertaken to combat higher commodity and shipping costs.
The company said in February it would raise soda prices further in 2023 "across the world" but at a moderating pace, even as rival PepsiCo hit a pause on price hikes.
Average selling prices increased 11% in the first quarter, the maker of Fanta and Sprite said, while global unit case volumes rose 3%.
"The strength in case volume growth gives us confidence that sales momentum can continue as Coca-Cola's sales strategies are resonating with consumers," Edward Jones analyst Brittany Quatrochi said.
The company's shares were up about 1% in early trading.
Pepsi and Coca-Cola have faced little or no pushback from consumers to price increases thanks to their near-domination of the global carbonated drinks market.
Still, on an earnings call Coca-Cola CEO James Quincey said, "There is uncertainty on how the consumer environment may ultimately play out in 2023."
Quincey also said the recent banking crisis has fueled further uncertainty about purchasing behaviors in Europe, while consumption is still recovering to pre-pandemic levels in China after the lifting of curbs.
Meanwhile, first-quarter operating margin slipped to 30.7%, compared to 32.5% a year earlier, on higher operating costs, increased marketing spending, investments and a strong dollar.
On the call, executives said freight expenses as well as some commodities costs were moderating but prices for sweeteners and juices were trending higher.
"With pricing expected to moderate over the course of the year, this should come in tandem with moderating levels of commodity inflation, which should help to protect profitability," said Wedbush analyst Gerald Pascarelli.
Revenue rose 4.3% to $10.96 billion, beating estimates of $10.80 billion, according to Refinitiv data, while adjusted earnings of 68 cents per share topped expectations of 64 cents.
>>> Procter & Gamble price hikes take sales from strength to strength
Jessica DiNapoli and Ananya Mariam Rajesh
April 21, 2023
(Reuters) -Procter & Gamble Co's customers continued to show little resistance to repeated price hikes, helping the Tide detergent maker boost its annual sales forecast and third-quarter margins.
The company also beat Wall Street targets for quarterly results and sweetened the pot for investors by raising the upper end of its 2023 share buyback target to between $7.4 billion and $8 billion, sending its shares up 2% in premarket trading.
The maker of Pampers diapers, Pantene shampoo and Oral-B toothpaste raised average prices across product categories by 10% during the quarter, and saw overall volumes fall just 3%.
Consumer goods makers, typically the last to see demand impacted by economic slowdowns, have hiked prices repeatedly to pass on steep input costs stemming from supply-chain snags and worsened by the Ukraine crisis.
P&G's gross margin rose by 150 basis points from a year ago, with a 470-basis point boost from the increased pricing.
But shrinking consumer wallets in the face of high inflation have fanned concerns of how much longer rising prices will be tolerated before triggering a switch to cheaper, private-label brands.
The decline in P&G's volumes sold is "obviously driven by pricing", said CFO Andre Schulten on a media call.
"We see consumers being a bit more careful with dosing and drawing down inventories over time."
The fabric and home-care unit, P&G's biggest segment, saw sales volumes fall 5%, with average price rising to 13%.
The company lowered its annual cost estimate related to commodity and freight expenses to about $3.5 billion from $3.7 billion, but Schulten said there is "no broad-based relief in input costs".
"Some (commodities) are down... Others are going up. Every highly energy intensive material, if you think about caustic soda or ammonium, it's actually increasing in pricing."
The company expects fiscal 2023 organic sales growth of about 6%, compared with its previous forecast for a 4% to 5% increase.
P&G maintained its annual earnings forecast of flat to a 4% rise.
>>> Clorox (CLX) is cutting about 200 jobs as it aims to continue a reorganization effort launched last year. The cuts were announced in a blogpost by CEO Linda Rendle.
The maker of disinfectant wipes and trash bags saw its stock balloon during the pandemic amid lockdowns and consumers' heightened concern about germs.
Last September the company introduced a new operating model to make Clorox more "consumer obsessed" and leaner, according to the blogpost.
"While I’m energized about these changes and what they enable for us as an enterprise, we did have to make some difficult decisions today with the elimination of approximately 200 positions, or roughly 4% of our nonproduction workforce," wrote Rendle.
Texas Roadhouse (TXRH) - >>> Don't Mess With This Texas Fast-Food Growth Stock After Sales Rise 100%
Investor's Business Daily
Restaurants have produced dozens of surprise winners over the decades, including Starbucks (SBUX) and Chipotle Mexican Grill (CMG). But it's gotten harder to uncover the best plays in this feast-or-famine market group. Enter growth stock Texas Roadhouse (TXRH), which is in a buy range after a breakout to all-time highs.
In January, TXRH shares rallied out of a flat base with a 101.85 entry in strong volume. Multiple tests of the 10-week line confirmed solid support as the stock headed up. The impressive Composite Rating of 96 signaled impressive strength while the 80 Relative Strength Rating met the requirement for growth stocks.
Growth Stock Revenue Doubles In Five Years
This fast-food growth stock has posted solid revenue growth over seven quarters. Sales have been on a tear, doubling to $4 billion in 2022, just five years after it hit the $2 billion mark.
Earnings have been in an uptrend in recent quarters as well, with Q4's profit of 89 cents per share up 17% year over year. The 55 cents per share dividend makes this issue even more attractive.
Higher sales offset lower margins in 2022, falling to 15.7% of sales due to inflation in both goods and wages. For 2023, the company expects further growth underpinned by higher menu prices.
Kentucky's Texas Roadhouse specializes in steaks, operating 697 owned and franchised restaurants across 49 states in the U.S. and 10 countries. This growth stock plans on expansion, buying up franchisees as company-owned stores are outperforming franchisees.
In 2022, it bought eight franchisees including key purchases in South Carolina and Georgia. The growth stock also benefits from its fast-casual chain Jaggers, which serves burgers, salads and shakes. and the Bubba 33 family restaurant chain.
Texas Roadhouse is in the Retail-Restaurants group, which holds 67th place among IBD's 197 industry groups.
Fund ownership stands at 61% of total outstanding shares.
Exchange traded funds own the stock as well with iShares Core S&P Mid-Cap (IJH) and the Vanguard Small Cap ETF (VB) hold positions.
Coca-Cola - >>> At the other end of the pricing spectrum is Coca-Cola, which sells a wide range of beverages at low prices. Coca-Cola might initially seem like a shaky long-term investment because soda consumption rates are declining worldwide, but the company isn't a one-trick pony. It also sells brands of bottled water, tea, juice, sports drinks, energy drinks, coffee, and even alcoholic beverages.
Coca-Cola has also been constantly refreshing its flagship sodas with new flavors, healthier versions, and smaller serving sizes to attract new customers. As a result, its growth has remained remarkably consistent.
Its organic sales grew 16% in both 2021 and 2022 -- partly driven by the food-service industry's post-pandemic recovery -- and it expects 7% to 8% growth in 2023. The company expects its comparable EPS to grow 7% to 9% on a constant-currency basis in 2023 even as higher commodity costs squeeze its gross margins.
Coca-Cola's stock still looks reasonably valued at 24 times forward earnings, it pays a decent forward dividend yield of 2.9%, and it's a dependable Dividend King that has raised its payout annually for 61 consecutive years. So if you're looking for a no-brainer blue chip stock to simply buy and forget for a few decades, Coca-Cola easily fits the bill.
Hermès - >>> Another iconic European luxury brand, Hermès, is a no-brainer buy right now. Just like Ferrari, Hermès doesn't need to worry about inflation and other macro headwinds because its core customers aren't much bothered by economic downturns. It can also easily afford to charge higher prices to offset its elevated supply chain costs.
Hermès differentiates itself from other top-tier luxury companies like LVMH (LVMUY) with two tactics.
First, it produces most of its products in France through a tight network of artisan workshops instead of outsourcing all of its production to overseas factories -- as LVMH does with most of its leading brands. That focus, which results in some items being crafted from start to finish by a single artisan, enables Hermès to sell its products at sky-high prices and gross margins.
Second, Hermès doesn't own a massive portfolio of secondary brands like LVMH does. It spends all of its cash cultivating the growth of its namesake brand, which prevents it from overdiversifying and diluting brand appeal.
This is a simple formula that generates consistent growth. Between 2017 and 2022, Hermès' revenue grew at a CAGR of 16%, its recurring operating margin expanded from 34.6% to 40.5%, and its net profit increased at a CAGR of 22%.
Analysts expect its revenue and net profit to grow 16% and 14%, respectively, in 2023. Its stock might seem pricey at 54 times this year's earnings, but it arguably deserves that high valuation.
The Procter & Gamble Company (NYSE:PG) - >>> Number of Hedge Fund Holders: 74
The Procter & Gamble Company (NYSE:PG) is behind some of the most famous shampoos, waxing creams, hair care products, skincare products, grooming products and cosmetics worldwide.
There could be several reasons to add this top beauty stock to your portfolio in 2023, the chief being The Procter & Gamble Company (NYSE:PG)’s stellar dividend history. The Procter & Gamble Company (NYSE:PG) has upped its dividends for over six decades now.
The Procter & Gamble Company (NYSE:PG) is a highly popular stock among elite hedge funds tracked by Insider Monkey. 74 hedge funds tracked by Insider Monkey had stakes in The Procter & Gamble Company (NYSE:PG) at the end of the fourth quarter of 2022. The biggest stakeholder of The Procter & Gamble Company (NYSE:PG) was Bridgewater Associates of Ray Dalio which had a $757 million stake.
Rowan Street Capital made the following comment about The Procter & Gamble Company (NYSE:PG) in its Q4 2022 investor letter:
“Let’s look at The Procter & Gamble Company (NYSE:PG). Dividend yield is 2.4%. Earnings are forecasted to grow at 5.9%, and its current earnings multiple is at 25x. Now, lets say over the next 3-5 years the market loses interest in the “safe”, mature companies that grow at anemic rates and gets an appetite for growth again. It’s very unlikely that Mr. Market will be paying 25x for 5.9% earnings growth. Lets assume that multiple declines to the market average of 18x — that would be ~6.9% drag per year on the total expected return over next 3-5 years. If we get 2.4% (dividend) + 5.9% (earnings growth) – 6.9% (decrease in earnings multiple) = 1.4% (annual return we can expect on average from this stock).”
>>> Yum! Brands, Inc. (NYSE:YUM) - Number of Hedge Fund Holders: 48
6-Month Performance as of March 30 (Relative to SPY): 8.41%
Another one of Cramer’s top restaurant stocks that were “about to pop” was Yum! Brands, Inc. (NYSE:YUM). He said that the company is well-run and is handling food inflation and wage pressures effectively. As of March 30, the stock has outperformed the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) by 8.41% over the past 6 months.
At the end of Q4 2022, 48 hedge funds were long Yum! Brands, Inc. (NYSE:YUM) and disclosed collective positions of $2.31 billion in the company. Of those, Citadel Investment Group was the top investor in the company and disclosed a position worth $404.9 million. <<<
>>> Yum! Brands, Inc., together with its subsidiaries, develops, operates, and franchises quick service restaurants worldwide. The company operates through four segments: the KFC Division, the Taco Bell Division, the Pizza Hut Division, and the Habit Burger Grill Division. It operates restaurants under the KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill brands, which specialize in chicken, pizza, made-to-order chargrilled burgers, sandwiches, Mexican-style food categories, and other food products. The company was formerly known as TRICON Global Restaurants, Inc. and changed its name to Yum! Brands, Inc. in May 2002. Yum! Brands, Inc. was incorporated in 1997 and is headquartered in Louisville, Kentucky.
>>> Clorox - After a major pullback from the latter half of 2020 through the middle of last year, shares of The Clorox Company (CLX 0.22%) are finally on the mend. The stock is up nearly 30% from 2022's low, and knocking on the door of new 52-week highs.
You know about the company's bleach and disinfectants using the same brand name. These cleaning products prompted the stock's huge run-up in early 2020. The world was looking for ways to protect itself from COVID-19 infections, making Clorox wipes a hot commodity. Once the initial dust settled, of course, the market realized it had pushed the stock far too high, and corrected the mistake over the next couple of years.
It's the Clorox you probably don't know, however, that makes this overly aggressive correction a prospective buying opportunity.
This company is also the name behind consumer goods ranging from Glad trash bags to Fresh Step kitty litter to Kingsford charcoal to Liquid-Plumr, and more. Clorox is now moving forward in a deliberate way with all of these brands, devoting its full attention to the so-called IGNITE growth strategy unveiled in late 2019 -- just before COVID-19 took hold in early 2020 and disrupted the initiative.
It's a slow-moving process. Analysts expect modest earnings growth on minimal revenue growth this year, and they are calling for per-share earnings to improve from $4.27 this year to $5.38 next year. Most of that improvement will likely stem from cost savings, though. Sales are only projected to grow about 3%, and it's still an expensive stock. It is progress, however, and the stock's budding rally says more and more investors are believing in the long-term potential of the IGNITE plan.
Perhaps more important to current and prospective shareholders is the fact that with next fiscal year's projected profits of $5.38 per share, the dividend is more than funded by earnings again. The Clorox Company's 20-year streak of dividend increases is still intact, with another one likely in the cards this year.
McDonald's - >>> Fast food retailer McDonald's has the lowest yield on this list at 2.3%, but that's still better than the S&P 500. Plus, this is also a fairly strong and resilient business to invest in. Even though inflation has negatively affected many businesses, McDonald's has been able to adapt.
For the last three months of 2022, the company's global comparable sales were up 12.6%, and in the U.S. they grew by 10.3%. The company says it has "benefited from strategic menu price increases" as consumers clearly have not ditched the restaurant chain despite higher prices. After all, McDonald's has fairly low-cost options for consumers, so increases there may be more modest than at more conventional restaurants. McDonald's earnings rose 16% during the period to over $1.9 billion.
McDonald's dividend looks as safe as ever. Like Medtronic, it has increased its payouts for 40-plus years in a row, and that trend doesn't look like it's in any danger of stopping anytime soon. The company makes dividend payments every March, June, September, and December.
Buying shares of McDonald's and the other two stocks on this list will ensure you're collecting a great dividend each month of the year.
McDonald’s - >>> Fast-food giant McDonald’s was as prepared as any restaurant chain could be for a global pandemic. About 65% of McDonald’s restaurants worldwide, and 95% of restaurants in the U.S., are equipped with a drive-thru. When dining rooms were shuttered in 2020, the drive-thru played a critical role for the company.
McDonald’s has also been investing in digital sales and delivery. The company launched a revamped mobile app in 2017 that allowed customers to order and pay from a smartphone, and its McDelivery service hit its stride in 2019 when partnering with DoorDash (NYSE:DASH) brought delivery to more than 10,000 locations.
But McDonald’s wasn’t immune from the turmoil in the restaurant industry during the early days of the pandemic. With fewer commuters, the company’s breakfast business took a huge hit in the U.S. Sales also plunged in international markets where drive-thrus are less prevalent. Global comparable sales tumbled 7.7% in 2020.
Although the pandemic isn’t officially over, McDonald’s is staging a vigorous recovery. Global comparable sales soared 12% in the first quarter of 2022, with modest growth in the U.S. coupled with strong double-digit growth in international markets. Systemwide sales were up 10% year over year.
The investments McDonald’s made in its digital channels before and during the pandemic are also paying off. Systemwide digital sales in the company’s six largest markets topped $5 billion in the first quarter alone, accounting for almost one-third of total systemwide sales. The recently launched MyMcDonald’s Rewards loyalty program already has 21 million customers enrolled, providing a strong incentive to choose McDonald’s over the competition.
Shares of McDonald’s have soared well past their pre-pandemic high, but the stock remains a good choice for investors looking for a high-quality restaurant for their portfolios. With a price-to-earnings ratio of roughly 25 based on the average analyst estimate for 2022, it’s not too late to invest in this top-notch fast-food chain.
Domino’s Pizza - >>> While McDonald’s only recently embraced delivery, Domino’s Pizza (NYSE:DPZ) long ago perfected the art of getting hot food to people quickly. With Domino’s locations largely tuned to carryout and delivery, the pandemic was a positive for the pizza chain.
U.S. same-store sales jumped by more than 11% in 2020, and international markets posted solid growth as well. The company opened more than 600 new locations in 2020, something that many restaurant chains wouldn’t dream of doing during the uncertainty of the pandemic.
With an increasing number of restaurants turning to third-party delivery services to boost sales, Domino’s is facing more delivery competition than ever. The good news is that Domino’s has some key competitive advantages.
The company and its franchisees do all delivery in-house, and Domino’s charges franchisees a very small fee for digital orders. In contrast, a restaurant using a third-party service pays far higher fees, sometimes passing the cost on to consumers in the form of higher prices. For consumers, third-party delivery often comes with multiple layers of fees that can drastically raise the cost of a meal.
Delivery was necessary for restaurants during the pandemic, but it’s unclear whether many will stick with it once dine-in business fully recovers. Domino’s certainly has a cost advantage over any restaurant using a third-party delivery service.
Business has started to slow down a bit for Domino’s. U.S. comparable sales were down 3.6% in the first quarter of 2022 amid staffing shortages and rising inflation. International comparable sales grew about 1%, enough to drive overall revenue slightly higher, but elevated costs led to a significant decline in profits.
Domino’s sells convenience. It was a popular choice before the pandemic, a very popular choice during the pandemic, and it will likely remain a popular choice after the pandemic. Domino’s stock may be a bit volatile as a lofty valuation collides with a slowdown in growth, but the company is well-positioned to continue to be the undisputed leader in the pizza industry.