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On May 31, Zacks Investment Research upgraded The WhiteWave Foods Company (WWAV - Snapshot Report) to a Zacks Rank #1 (Strong Buy).

Estimates of this consumer packaged food/beverage company have been rising sharply after it reported solid first-quarter fiscal 2014 results and increased the full-year forecasts on May 8.

This natural, organic and plant-based food/beverages maker saw earnings per share growth of 23.3% last year, and is poised well for this year as well as it gains momentum from the natural/organic food revolution. Shares of WhiteWave Foods surged almost 40% year-to-date.

Why the Upgrade?

WhiteWave Foods’ first-quarter adjusted earnings (excluding expected investments in a Chinese joint venture) of 22 cents beat the Zacks Consensus Estimate of 20 cents by 10% as well as management’s expectations. Earnings grew 40% year over year driven by solid top line and operating profit. In fact, WhiteWave Foods has surpassed the Zacks Consensus Estimate for earnings for four straight quarters.

Sales increased 36% to $830 million and also beat the Zacks Consensus Estimate by almost 5%. Organically, revenues grew 12% as both the North American and European businesses reported strong volumes. All the company’s brands experienced strong growth in the quarter. Operating profits grew 35% year over year driven by solid top-line growth.

Net sales grew 39%, while operating profit grew 32% in the North America segment. The leading organic greens and produce brand — Earthbound Farms — acquired in January this year, contributed $146 million to sales in this quarter. Moreover, increased volumes and product innovation in the other platforms — plant-based beverages, premium dairy and coffee creamers — boosted revenues and profit in North America. Excluding the Earthbound acquisition, the North America top line grew 10% organically.

Net sales grew 24% (up 19% on a constant currency basis), while operating profit grew 55% in the European segment. Continued robust volume growth of plant-based almond beverages and non-dairy yogurts, and growth in soy beverages pulled up the quarterly revenues.

Buoyed by the solid first-quarter results and expectations of continued momentum, management increased its previously provided outlook for the full year. For the full year, sales growth is expected in the low 30% range, higher than prior expectation in the high 20% range. Organically, revenues are expected to grow in the range of 8–9%, up from the 7% to 8% range originally forecasted. In the second quarter also, reported sales are expected to increase in the low 30% range.

Management expects adjusted total operating income percentage growth rate in the low-40s for 2014, higher than prior expectation of mid-30s percentage increase. Strong revenues and cost savings are expected to fuel the margin expansion. Management expects a similar operating income growth rate in the second quarter.

Adjusted diluted earnings per share are expected between 98 cents and 98 cents, much better than 90–94 cents expected earlier, excluding investments in the Chinese joint venture. For the second quarter, management expects adjusted diluted earnings per share to range within 21 to 22 cents, excluding the China joint venture costs.

Management also expects to increase production capacity in both North America and Europe this year to support the better-than-expected volume growth that the company has been experiencing lately.

Other Stocks to Consider

Other food/beverage companies that can be considered include Coca-Cola Enterprises, Inc. (CCE - Analyst Report), B&G Foods, Inc. (BGS - Snapshot Report) and The Hain Celestial Group, Inc. (HAIN - Analyst Report). All the three stocks carry a Zacks Rank #2 (Buy).

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