Quaker Oats, despite its name, is a diversified food and beverage company which provides not only the namesake breakfast cereal, but a variety of products (including Gatorade) on a worldwide basis. The company has used a growth through acquisition strategy throughout much of the early 1990s, but it has also sold off those businesses which are not part of its core market. As a result, the company is much less diversified than it was at the beginning of the decade. The sell-offs and restructurings which accompanied them have taken their toll on the company's financial performance, and the stock price has varied little until recent months, when it began turning upward and has seen nearly a 20 percent increase since mid-1996. This research examines the financial performance of the company and considers where the stock price might be in a year's time.
Quaker Oats is a major participant in the highly competitive global packaged food and beverage industry, and is a leading manufacturer of sports beverages, premium iced tea and single-serve juice drinks, hot cereals, pancake mixes, grain-based snacks, cornmeal, hominy grits and value-added rice products. In addition, Quaker Oats is the second-largest manufacturer of syrups and value-added pasta products and is among the five largest manufacturers in the world of ready-to-eat cereals and dry pasta products. Because of its global presence, the company is susceptible to fluctuations in currency rates, and is particularly hurt by a strong dollar, which effectively increases the price of its goods in foreign markets.
Quaker Oats competes with both large and small companies on the basis of price, value, quality and convenience. Its grocery products are purchased by consumers through a wide range of food distributors, and the company uses both its own and broker sales forces and has distribution centers throughout the country. In addition, Quaker Oats markets a line of over 400 items f...