In addition to providing a steady record of growth, Procter & Gamble is a cash cow. The company consistently generates high free cash flows, sometimes (as in 1997) even surpassing its reported net income. Typically, with a slow-growing company, especially for a mature giant such as Procter & Gamble, the more free cash flow the better. A slow grower with negative free cash flows can become (or already is) a money pit, plowing more money into the business than the business is generating. Capital-intensive industries, such as steel and autos, are filled with such money pits. Procter & Gamble, by contrast, is producing real profit for its shareholders, and a lot of it.
What's the Company Doing with Its Money? >>