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No. of Recommendations: 0
1. Repeat Purchase Business: Yes, razor blades and batteries.
2. Global Consumer Brand: Yes, Gillette, Duracell, etc
3. Sporting Strong Historical Performance: More than 10 fold increase in stock price over past 10 years
4. Super-size the company: Market cap over $50 billion
5. A direction that exceeds location: Gross margins, operating margins, net margins increasing steadily over past 10 years
6. Gross Margins of at Least 50%: Fiscal 1997 gross margin = 62%
7. Net margins of at Least 7%: Fiscal 1997 net margin = 14.2%
8. Cash no less than 1.5x Long-Term Debt: No, due to predicability of free cash flows cash on hand is minimal, also share repurchases ongoing
9. Efficient use of cash (Flow ratio): Could use improvement - Fiscal 1997 Curr Assets (less cash) vs Curr Liab = 1.74
Conclusion: Fits majority of criteria, however Flow ratio could use improvement.

I think its a winner. (Note: it is a memeber of this Fool's Rule Maker portfolio.)

Mark
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No. of Recommendations: 0
Which company would you propose as it's foremost competitor in razor blades, shavers, and batteries?

Wall Street puts Gillette in the "Personal Care and Home Products" industry (i.e. Proctor and Gamble) but I don't think they are competitors.
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Which company would you propose as it's foremost competitor in razor blades, shavers, and batteries?


Based on a big article I read in Worth magazine about the development of the new Mach 3 shaving system, the higher-ups at Gilette tended to keep a close eye on developments with the Schick product line. Schick is part of Warner-Lambert (WLA) which makes a slew of consumer products, everything from OTC medicenes to Listerine to razors.

Well that's my two cents.

the LanceMan
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I ran my RM numbers with Warner Lambert as Gillette's competitor (my first guess was Proctor & Gamble) and the score went down.

This is an interesting phenomenon of trying to do comparisons of RM companies who are conglomerates. It would be nice if financial data was available so we could compare apples to apples on the income statements. Some companies do, some don't.

Does anyone have a sensible way to approach this?

Huby
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As a thought, when a company's main competitor is a conglomerate, it immediately has the edge in my opinion. If we've learned anything from the Buffet and Janus Twenty era, it's focus. I bought EMC for primarily this reason--concentration. Put all your eggs in one basket, and watch that basket. A bit extreme but you get the idea. I believe Buffet said that. Gillette came out with the Mach III first because they focus and support with capital a lesser amount of different products all of which are largely similar in nature--personal care.
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As a thought, when a company's main competitor is a conglomerate, it immediately has the edge in
my opinion.


I don't think this can be applied as a general rule. Two good examples come to mind - GE and Berkshire Hathaway.

Elan
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