Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Dean Foods Company stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current ratio with: a) where this ratio has been in the past; b) how does it compare to the average for the industry/sector; and c) how does it compare to the market as a whole.
On this front, Dean Foods has a trailing twelve months PE ratio of 14.05. This level actually compares pretty favorably with the market at large, as the PE ratio for the S&P 500 compares in at about 19.79.
This level puts Dean Foods’ current PE ratio above its midpoint (which is 13.25) over the past five years.
DEAN FOODS CO PE Ratio (TTM)
Further, the stock’s PE also compares favorably with the broader Consumer Staples sector’s trailing twelve months PE ratio, which stands at 21.90. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers. The chart below depicts both the stock’s PE trend over the past five years, and its comparison with the sector PE:
We should also point out that Dean Foods has a forward PE of a little less – 13.6 – so it is fair to say that a slightly more value-oriented path may be ahead for Dean Foods stock in the near term too. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Dean Foods has a P/S ratio of about 0.25. This compares favorably with the S&P 500 average, which stands at 3.00 right now. However, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, DF is clearly in the lower zone of its range in the time period from a P/S metric, suggesting some level of undervalued trading – at least compared to historical norms.
Broad Value Outlook
In aggregate, Dean Foods currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Dean Foods a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Dean Foods is just 1.13, a level that is lower than the industry average of 2.20. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 8.47, which is far better than the industry average of 12.01. Clearly, DF is a solid choice on the value front from multiple angles.
What about the Stock Overall?
Though Dean Foods might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a momentum score of ‘F’. This gives DF a Zacks VGM score—or its overarching fundamental grade—at ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen seven estimates go higher in the past 60 days compared to none lower, while the full year estimate has seen seven up and none down in the same time period.
This has had a meaningful impact on the consensus estimate, as the current quarter consensus estimate has risen by 13.5% in the past two months, while the full year estimate has gone higher by 3.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
DEAN FOODS CO Price and Consensus
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Dean Foods is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank and a top Zacks Rank, the company deserves attention right now. So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Image: Bigstock
Is Dean Foods (DF) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Dean Foods Company stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current ratio with: a) where this ratio has been in the past; b) how does it compare to the average for the industry/sector; and c) how does it compare to the market as a whole.
On this front, Dean Foods has a trailing twelve months PE ratio of 14.05. This level actually compares pretty favorably with the market at large, as the PE ratio for the S&P 500 compares in at about 19.79.
This level puts Dean Foods’ current PE ratio above its midpoint (which is 13.25) over the past five years.
DEAN FOODS CO PE Ratio (TTM)
DEAN FOODS CO PE Ratio (TTM) | DEAN FOODS CO Quote
Further, the stock’s PE also compares favorably with the broader Consumer Staples sector’s trailing twelve months PE ratio, which stands at 21.90. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers. The chart below depicts both the stock’s PE trend over the past five years, and its comparison with the sector PE:
We should also point out that Dean Foods has a forward PE of a little less – 13.6 – so it is fair to say that a slightly more value-oriented path may be ahead for Dean Foods stock in the near term too. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Dean Foods has a P/S ratio of about 0.25. This compares favorably with the S&P 500 average, which stands at 3.00 right now. However, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, DF is clearly in the lower zone of its range in the time period from a P/S metric, suggesting some level of undervalued trading – at least compared to historical norms.
Broad Value Outlook
In aggregate, Dean Foods currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Dean Foods a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Dean Foods is just 1.13, a level that is lower than the industry average of 2.20. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 8.47, which is far better than the industry average of 12.01. Clearly, DF is a solid choice on the value front from multiple angles.
What about the Stock Overall?
Though Dean Foods might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a momentum score of ‘F’. This gives DF a Zacks VGM score—or its overarching fundamental grade—at ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen seven estimates go higher in the past 60 days compared to none lower, while the full year estimate has seen seven up and none down in the same time period.
This has had a meaningful impact on the consensus estimate, as the current quarter consensus estimate has risen by 13.5% in the past two months, while the full year estimate has gone higher by 3.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
DEAN FOODS CO Price and Consensus
DEAN FOODS CO Price and Consensus | DEAN FOODS CO Quote
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Dean Foods is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank and a top Zacks Rank, the company deserves attention right now. So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.