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Dean Foods Hits 52-Week High: A Must-Add to Your Portfolio
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Dean Foods Company appears promising on the back of a robust brand portfolio, strategic measures, healthy financial status and third-quarter 2016 results. Also, this Zacks Rank #1 (Strong Buy) stock hit a 52-week high of $22.03 on Dec 16, closing lower at $21.97. Notably, it has yielded a return of 28% on a year-to-date basis, apparently outperforming the Zacks categorized Food-Dairy Products industry’s growth of 23%. Moreover, the company exhibits a VGM Score of “B” and has a long-term earnings growth rate of 12%, making us confident of its inherent strength.
Dean Foods remains keen on taking prudent steps to optimize its capital allocation and concentrate on core business activities. Its strategic measures are primarily focused on three controllable factors – price realization, cost productivity and creating a balance between pricing and volumes. These are likely to aid in delivering favorable returns even in the face of industry headwinds.
Additionally, Dean Foods' brand strength provides a competitive advantage and reinforces its customer base. Alongside, it boasts a strong financial status, which enables the company to pay dividends and make share repurchases.
Notably, this leading processor in the food and beverage industry reduced its net debt to bank EBITDA (earnings before interest, taxes, depreciation and amortization) ratio to 1.92 times at the end of the third quarter, lower by more than two full turns from the end-2014 level. Moving ahead, the company remains on track to consolidate its position in the dairy industry and boost shareholder value.
Driven by these factors, Dean Foods’ bottom line has outperformed estimates, by an average of 5.4%, in the trailing four quarters. In third-quarter 2016, its earnings were in line with the Zacks Consensus Estimate and also surged year over year, driven by a decline in raw milk prices. Also, sales exceeded estimates, thus scoring a hat-trick of positive sales surprises.
Following the impressive results, management stated that it projects the fourth quarter to mark Dean Foods’ eighth straight quarter of adjusted operating income growth. Further, it anticipates fourth-quarter 2016 adjusted earnings to be in the range of 37–45 cents a share. Consequently, the Zacks Consensus Estimate for the current quarter and 2016 has increased 13.5% to 42 cents and 3.2% to $1.62, respectively, in the past 60 days.
Looking ahead, the company is well positioned and is likely to gain from its cost-reduction operations. Also, the recently acquired Friendly's Ice Cream manufacturing and retail operations has been acting as an asset for Dean Foods’ dairy brand portfolio.
US Foods, with a long-term earnings growth rate of 17.1%, has climbed 16.4% in the past three months.
Lancaster Colony has increased 23.6% in the past one year. The stock has outperformed by an average surprise of 8.6% in the trailing four quarters.
Ingredion, with a long-term earnings growth rate of 11%, has gained 31.3% year to date.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
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Dean Foods Hits 52-Week High: A Must-Add to Your Portfolio
Dean Foods Company appears promising on the back of a robust brand portfolio, strategic measures, healthy financial status and third-quarter 2016 results. Also, this Zacks Rank #1 (Strong Buy) stock hit a 52-week high of $22.03 on Dec 16, closing lower at $21.97. Notably, it has yielded a return of 28% on a year-to-date basis, apparently outperforming the Zacks categorized Food-Dairy Products industry’s growth of 23%. Moreover, the company exhibits a VGM Score of “B” and has a long-term earnings growth rate of 12%, making us confident of its inherent strength.
Dean Foods remains keen on taking prudent steps to optimize its capital allocation and concentrate on core business activities. Its strategic measures are primarily focused on three controllable factors – price realization, cost productivity and creating a balance between pricing and volumes. These are likely to aid in delivering favorable returns even in the face of industry headwinds.
Additionally, Dean Foods' brand strength provides a competitive advantage and reinforces its customer base. Alongside, it boasts a strong financial status, which enables the company to pay dividends and make share repurchases.
Notably, this leading processor in the food and beverage industry reduced its net debt to bank EBITDA (earnings before interest, taxes, depreciation and amortization) ratio to 1.92 times at the end of the third quarter, lower by more than two full turns from the end-2014 level. Moving ahead, the company remains on track to consolidate its position in the dairy industry and boost shareholder value.
Driven by these factors, Dean Foods’ bottom line has outperformed estimates, by an average of 5.4%, in the trailing four quarters. In third-quarter 2016, its earnings were in line with the Zacks Consensus Estimate and also surged year over year, driven by a decline in raw milk prices. Also, sales exceeded estimates, thus scoring a hat-trick of positive sales surprises.
Following the impressive results, management stated that it projects the fourth quarter to mark Dean Foods’ eighth straight quarter of adjusted operating income growth. Further, it anticipates fourth-quarter 2016 adjusted earnings to be in the range of 37–45 cents a share. Consequently, the Zacks Consensus Estimate for the current quarter and 2016 has increased 13.5% to 42 cents and 3.2% to $1.62, respectively, in the past 60 days.
DEAN FOODS CO Price and Consensus
DEAN FOODS CO Price and Consensus | DEAN FOODS CO Quote
Looking ahead, the company is well positioned and is likely to gain from its cost-reduction operations. Also, the recently acquired Friendly's Ice Cream manufacturing and retail operations has been acting as an asset for Dean Foods’ dairy brand portfolio.
Key Picks
Other favorably placed stocks include US Foods Holding Corp. (USFD - Free Report) , Lancaster Colony Corporation (LANC - Free Report) and Ingredion Incorporated (INGR - Free Report) , all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
US Foods, with a long-term earnings growth rate of 17.1%, has climbed 16.4% in the past three months.
Lancaster Colony has increased 23.6% in the past one year. The stock has outperformed by an average surprise of 8.6% in the trailing four quarters.
Ingredion, with a long-term earnings growth rate of 11%, has gained 31.3% year to date.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>