(By Mayur Pahilajani - iStockAnalyst Writer)
Dallas, TX - Dean Foods Co. New (NYSE: DF) is one of the few green spots among the consumer-product companies trading in red as technical indicators for its stock are bullish.
Milk and dairy products processor and distributor Dean Foods had an advantage over other sectors in an economically challenging environment as more number of consumers purchased dairy products in the last quarter. The outlook continues to remain positive.
The company also benefited from declining costs of raw dairy and fuel charges. Standard & Poor's has “buy” rating on the company, while Credit Suisse has reaffirmed its "Outperform" rating on the firm’s stock, after raising its price estimate to $22 per share from the previous $20 per share.
The largest dairy company in the United States announced Wednesday that its fourth-quarter net profit more than doubled despite dipping revenue.
“The outperformance was driven by lower commodity dairy costs,” Farha Aslam, an analyst at Stephens Inc., told Bloomberg today. “Dairy farmers are beginning to cull their herds so commodity dairy prices should increase in the calendar second half of 2009.”
Net income in the quarter surged to as much as $66.4 million, or 42 cents per share, from the reported $32.6 million, or 24 cents per share, in the same quarter a year earlier. Profit from continuing operations for the fourth quarter of 2008 totaled $67.4 million.
Excluding items, including a $3.9 million charge related plant closings and reorganization costs, earnings of the company increased to $71.3 million or 46 cents, from 27 cents in the year earlier period.
The market analysts on Wall Street had expected the firm to a profit of 39 cents per share, excluding one-time items, in the same three months.
But revenue of the company dropped by almost 4.7 percent to $3.08 billion, compared to $3.23 billion in the year-ago period. The analysts on Wall Street projected revenue of $3.22 billion in the quarter.
In the local markets, several packaged-food processing and distributing firms are experiencing a slowdown in demand as consumers and businesses continue to cut down on their spending and limit their purchases to discounted and cheaper brands.
The overall results improved on solid performances from its DSD Dairy and WhiteWave-Morningstar business units in the three months ended Dec. 31.
Sales revenue was negatively impacted by the pass-through of lower overall dairy commodity costs, which were partially offset by acquisition-aided volume growth in the two segments.
