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Earnings momentum for Fresh Del Monte Produce Inc. (FDP - Snapshot Report) has been trending upwards over the past week given the farm goods dealer’s second consecutive earnings beat this year. The company delivered a positive surprise of 11.0% in the second quarter due to benefits realized from its strategic initiatives, operational strength, elasticity in its logistics, discreet product supply management and expanding global customer base.

With a price-to-book (P/B) multiple of just 0.8 and a price-to-sales (P/S) ratio as low as 0.4, this Zacks #1 Rank (Strong Buy) stock offers a promising value proposition for investors.

Impressive Second Quarter

On July 31, Fresh Del Monte reported second-quarter earnings per share of $1.01, a significant jump of 31.2% from the year-ago earnings of 77 cents. It also surpassed the Zacks Consensus Estimate at 91 cents.

However, net sales slumped 7.9% year over year to $957.6 million. Net sales in the Banana segment dipped 8.8% to $424.9 million, while Other Fresh Produce sales were down 4.8% to $453.8 million. Net sales at the Prepared Food segment slipped 18.7% to $78.9 million.

Despite the sales decline, the company managed to improve gross profit by 0.8% to $103.7 million with the help of higher sales prices in the Other Fresh Produce segment, operational advancements and lower ocean freight costs. Gross margin of 10.8% compared favorably with the year-ago margin of 9.9%. The company’s operating income jumped 26.4% to $70.8 million on account of improved gross profit, lower asset impairment and other charges, and lesser selling, general and administrative expenses.

Earnings Estimates Move Up

In the last 7 days, the Zacks Consensus Estimate for 2012 increased 6.2% to $2.39 based on upward revisions from 4 of 5 estimates. The Zacks Consensus Estimate for 2013 advanced 4.2% to $2.48 over the same timeframe as 4 of 5 estimates moved higher. The estimates for 2012 and 2013 reflect an annualized growth of 31.2% and 3.7%, respectively.

Valuation Shows Promise

The forward prospects of Fresh Del Monte remain promising as evident from a P/E multiple of 10.5, P/S ratio of 0.4 and a P/B ratio of 0.8. (A P/E below 15.0, a P/S ratio lesser than 1.0 and a P/B ratio under 3.0 generally hints at a value stock.) Moreover, the company has a 1-year ROE of 7.1%, on par with the peer group average. Furthermore, Fresh Del Monte’s shares gained nearly 14% since March 22.

Founded in 1886, Fresh Del Monte is based in George Town, Cayman Islands. The company engages in producing, sourcing, transporting, and marketing fresh and fresh-cut produce across the globe. The company is also a leading producer and distributor of prepared food in Europe, Africa, the Middle East and the countries that were formerly part of the Soviet Union. It offers fresh produce primarily under the DEL MONTE brand, as well as under the UTC and Rosy names; and prepared fruits and vegetables, juices, beverages, and snacks under the DEL MONTE, Fruit Express, Just Juice and Fruitini brands.

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