Although Diamond Foods' third-quarter fiscal 2014 earnings missed
the Zacks Consensus Estimate, we are impressed with its cost
containment endeavors and operational initiatives, which helped it
to register a 37.5% year over year growth. Further, we observed
that the company's turnaround strategies such as improving price
realization, lowering underperforming SKUs and reducing dependency
on discounts have helped it stabilize falling revenues as apparent
from its flat year over year sales performance. Moreover, we expect
the company's future results to exhibit more sustained growth of
its brands due to product innovation and differentiation as well as
improved cost structure. However, we cannot ignore the near-term
headwinds such as challenges related to procurement of walnut
supplies and mending ties with growers. Furthermore, we remain
skeptical about the company's performance going forward due to its
highly leveraged balance sheet.
Headquartered in Stockton, CA, Diamond Foods Inc. is a specialty
food company focused on processing, marketing and distribution of
snack products and culinary, ingredient and in-shell nuts. Diamond
Foods reports its operating results under 2 segments Snacks and
Nuts. Snacks segment comprises the Kettle U.S., Kettle U.K. and Pop
Secret brands, while the Nuts segment includes the Diamond of
California and Emerald brands.
Diamond Foods products are sold in more than 60,000 retail
locations in the United States, and also overseas in more than 100
countries, primarily in Germany, Japan, Spain and Italy.
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