It's ironic that value investor Warren Buffett was so eager to participate in Wrigley's purchase by Mars. Buffett's Berkshire Hathaway apparently didn't own any Wrigley stock prior to the deal's announcement in April. Wrigley is valued at 28 times projected 2009 profits, about double the P/E on most food companies.

Cramer: What Is Dow Thinking?: Jim Cramer discusses the inexplicable amount of money that Dow Chemical is paying for Rohm & Hass.


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wwy not?

growth

The Real Story, April 28
New York's major averages finished about where they started Monday as investors awaited the upcoming Federal Reserve gathering and digested a batch of merger news and positive earnings reports.

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P/E of 25, a PEG of 2.66, and a yield of 2.3%.

Candy maker The William Wrigley Jr. Co. recently authorized an $800 million share buyback program. About $254 million remains under its current program.

It also said last week that its fourth-quarter net income rose 20 percent, helped by the benefit of a weaker dollar and higher selling prices.

It also boosted its quarterly dividend by about 4 cents to 33 cents and upped its share buyback program.

The company has long commanded the sector's highest price/earnings ratio, owing to its No. 1 rank in the global gum market and its superior earnings growth. But Wrigley may not be worth such a big premium even with its stock at 55, down from a high of 69. Shares trade for 22 times estimated 2008 profits. Wrigley is well entrenched overseas but faces a strong competitive challenge from Cadbury Schweppes (ticker: CSG), which has gained market share at Wrigley's expense in the $19 billion gum business. Wrigley has targeted earning-per-share growth of 9% to 11%, not much better than Kellogg, which has a lower P/E.

Wrigley (WWY) sweetened its quarterly dividend 15.5% on its regular and Class B common, to 33.5 cents a share from 29 cents. Yield: 2.44%.Dividends have been paid without interruption since 1913 and enhanced every year since 1980.

Wrigley (WWY) was upgraded from Neutral to Overweight, JP Morgan said. Valuation call, as the stock has sold hold, but doesn't have the same cost inflation pressures that others in the food industry share. Company also has a sizable overseas presence.

Topped out

Mother in law worked for WRigley