Wrigley was the world’s largest manufacturer and distributor of chewing gum. The firm’s industry, branded consumer foods and candy, was intensely competitive and was dominated by a few large players. Exhibit 1 gives product profiles of Wrigley and its peers. Over the preceding two years, revenues had grown at an annual compound rate of 10% (earnings at 9%), reflecting the introduction of new products and foreign expansion (Exhibit 2). Historically, the firm had been conservatively financed. At the end of 2001, it had total assets of $1.76 billion and no debt (Exhibit 3). As Exhibit 4 shows, Wrigley’s stock price had significantly outperformed the S&P 500 Composite Index, and was running slightly ahead of its industry index.
Wrigley was the world’s largest manufacturer and distributor of chewing gum. The firm’s industry, branded consumer foods and candy, was intensely competitive and was dominated by a few large players. Exhibit 1 gives product profiles of Wrigley and its peers. Over the preceding two years, revenues had grown at an annual compound rate of 10% (earnings at 9%), reflecting the introduction of new products and foreign expansion (Exhibit 2). Historically, the firm had been conservatively financed. At the end of 2001, it had total assets of $1.76 billion and no debt (Exhibit 3). As Exhibit 4 shows, Wrigley’s stock price had significantly outperformed the S&P 500 Composite Index, and was running slightly ahead of its industry index.
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