Dean Foods Co. Earnings Cheat Sheet: Margins Shrink For Fifth Straight Quarter

S&P 500 (NYSE:SPY) component Dean Foods Company (NYSE:DF) reported a drop to a loss in the third quarter driven by higher costs. Dean Foods is a food and beverage company in the United States offering dairy and frozen food products.

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Dean Foods Company Earnings Cheat Sheet for the Third Quarter

Results: Reported a loss of $1.5 billion ($8.39 per diluted share) in the quarter. Dean Foods Company had a net income of $24.3 million or 13 cents per share in the year earlier quarter.

Revenue: Rose 11.3% to $3.4 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: DF reported adjusted net income of 18 cents per share. By that measure, the company beat the mean estimate of 15 cents per share. It beat the average revenue estimate of $3.32 billion.

Quoting Management: “The third quarter marks a return to growth for Dean,” said Gregg Engles, Chairman and CEO. “Consolidated adjusted operating income increased 5% and adjusted diluted earnings per share increased 39% in the quarter. While Fresh Dairy Direct continued to face challenges in the quarter, WhiteWave-Alpro posted exceptional results and corporate costs declined due to our focus on reducing SG&A costs, resulting in the return to growth in the quarter.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 3.1 percentage points to 21.5% from the year earlier quarter. Over that time, margins have contracted on average 2.6 percentage points per quarter on a year-over-year basis.

The company has now topped analyst estimates for the last four quarters. It beat the mark by one cent in the second quarter, by 8 cents in the first quarter, and by one cent in the fourth quarter of the last fiscal year.

Revenue has risen the past four quarters. Revenue increased 11.6% to $3.3 billion in the second quarter. The figure rose 2.6% in the first quarter from the year earlier and climbed 5.1% in the fourth quarter of the last fiscal year from the year-ago quarter.

Looking Forward: Expectations for the company’s next quarter performance are more favorable than they were a month ago. The average estimate for the fourth quarter is now at 23 cents per share, up from 23 cents. The average estimate for the fiscal year is 69 cents per share, falling from 70 cents thirty days ago.

Competitors to Watch: Lifeway Foods, Inc. (NASDAQ:LWAY), Tofutti Brands Inc. (AMEX:TOF), Synutra Intl., Inc. (NASDAQ:SYUT), Smart Balance, Inc. (NASDAQ:SMBL), Mead Johnson Nutrition CO (NYSE:MJN), Wimm-Bill-Dann Foods OJSC (NYSE:WBD), Pepsi (NYSE:PEP), Coca-Cola (NYSE:KO), Kraft (NYSE:KFT), Kellogg (NYSE:K), ConAgra (NYSE:CAG) and The Hain Celestial Group, Inc. (NASDAQ:HAIN).

Investing Insights: Here’s Why Chipotle’s Stock Keeps Winning.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

 

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