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URL:  http://boards.fool.com/sigma-aldrich-sial-20210997.aspx

Subject:  Sigma-Aldrich (SIAL) Date:  1/25/2004  10:49 AM
Author:  Solidago Number:  27961 of 46842

Looks like the Foolish Collective took a look at Sigma Aldrich Corp. last year, http://boards.fool.com/Message.asp?mid=19124646. I recently found this company on one of my screens and I decided to take a bit closer look. I like what I saw. Nice growth, good price and very shareholder friendly finances.

Here is my analysis:

SIGMA ALDRICH CORP (SIAL )
[Data from MSN]

1 Has the company performed well consistently?
Yes
ROE is increasing
					
Period ROE ROA ROIC
9/1/03 21.4% TTM
Dec-02 15.5% 9.2% 11.6%
Dec-01 16.9% 10.1% 12.7%
Dec-00 30.2% 23.0% 27.0%
Dec-99 13.9% 12.0% 13.6%


2 Has the company avoided excess debt?
Yes

			
Period LT Debt/Equity
9/1/03 0.18 Q
Dec-02 0.20
Dec-01 0.22
Dec-00 0.12
Dec-99 0.00
Dec-98 0.00

3 Can managers convert sales to profits?
Yes
Net profit remains about 10%.
			
Period Net Profit Margin
9/1/03 14.9% Q
Dec-02 10.8%
Dec-01 11.9%
Dec-00 29.2%
Dec-99 16.6%
Dec-98 13.9%

4 Are managers handling shareholders' money rationally?
Yes
Managers are agressively buying back shares and increasing dividends!
				
Period Shares Dividends Yield
Dec-02 71.3 $0.34 0.64%
Dec-01 73.0 $0.33 0.54%
Dec-00 76.2 $0.31 0.73%
Dec-99 98.3 $0.29 0.65%
Dec-98 100.7 $0.28 0.65%
Rate -6.67% 3.96% -0.40%


5 Has management actually increased shareholder value?
Not obviously.
				
Period Retained Earn. Market Cap Ratio
Dec-02 $12 "$3,795" -$57.56
Dec-01 -$82 "$4,491" -$15.26
Dec-00 -$612 "$3,242" $1.87
Dec-99 $35 "$4,387" $1.72
Dec-98 $134 "$4,327"
Total -$512 -$532 $1.04

6 Has the company consistently increased owner earnings?
Yes
			
Period Owner Earnings
9/1/03 329.1 TTM
Dec-02 268.8
Dec-01 42.4
Dec-00 669.4
Dec-99 129.1
Dec-98 -17.2
Rate 11.7%

7 Is the stock currently selling at a 25% discount to intrinsic value?
No
			
Current Price $56.99 Discount
Graham's Formula $66.44 14%
Dam IV $36.76 -55%
OE IV (5 yr. reg.) $100.17 43%
OE IV (5 yr. current) $109.37 48%

					
PosFCF PosFCF/sh PosFCF yield
PosFCF Screen $253.30 $3.55 6.2%
$236.00 $3.36 5.9% TTM

	Assumptions				
10.8% G rate for Graham's
5 Length of high growth period
4.0% Stable growth rate
10% Discount rate


8 Is the business easy to understand?
This is not the easiest business to understand. Knowledge of chemistry is important to understanding the business.


9 Does the business have favorable long-term prospects?
This business is a Weak Franchise/Strong Commodity Business. Their specialty in chemicals for biotechnology/genetics is a growth industry that is likely to keep growing for a while.


10 Is management rational?
There is no current indication that management is not rational. However, I would like Mr. Harvey to foster some leadership development in his company buy promoting someone into either the Chairman or CEO position.


11 Is management candid with its shareholders?
I'm not sure yet on this one. While there isn't a lot put out for shareholders,

I'm not sure whether or not they are being candid with their shareholders. I haven't read any material yet by the company that discusses negative developments. Anyone here have an

opinion on this?


12 Does management resist the institutional imperative?
Not sure. They seem to have their own direction under David Harvey.

Let me know if you have any questions regarding my analysis. I'm hoping to make a purchase decision soon on this company and would love to hear your thoughts on it.


Solidago


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