On May 31, Zacks Investment Research upgraded
The WhiteWave Foods Company
) to a Zacks Rank #1 (Strong Buy).
Estimates of this consumer packaged food/beverage company have
been rising sharply after it reported solid first-quarter fiscal
2014 results and increased the full-year forecasts on May 8.
This natural, organic and plant-based food/beverages maker saw
earnings per share growth of 23.3% last year, and is poised well
for this year as well as it gains momentum from the natural/organic
food revolution. Shares of WhiteWave Foods surged almost 40%
Why the Upgrade?
WhiteWave Foods' first-quarter adjusted earnings (excluding
expected investments in a Chinese joint venture) of 22 cents beat
the Zacks Consensus Estimate of 20 cents by 10% as well as
management's expectations. Earnings grew 40% year over year driven
by solid top line and operating profit. In fact, WhiteWave Foods
has surpassed the Zacks Consensus Estimate for earnings for four
Sales increased 36% to $830 million and also beat the Zacks
Consensus Estimate by almost 5%. Organically, revenues grew 12% as
both the North American and European businesses reported strong
volumes. All the company's brands experienced strong growth in the
quarter. Operating profits grew 35% year over year driven by solid
Net sales grew 39%, while operating profit grew 32% in the North
America segment. The leading organic greens and produce brand -
Earthbound Farms - acquired in January this year, contributed $146
million to sales in this quarter. Moreover, increased volumes and
product innovation in the other platforms - plant-based beverages,
premium dairy and coffee creamers - boosted revenues and profit in
North America. Excluding the Earthbound acquisition, the North
America top line grew 10% organically.
Net sales grew 24% (up 19% on a constant currency basis), while
operating profit grew 55% in the European segment. Continued robust
volume growth of plant-based almond beverages and non-dairy
yogurts, and growth in soy beverages pulled up the quarterly
Buoyed by the solid first-quarter results and expectations of
continued momentum, management increased its previously provided
outlook for the full year. For the full year, sales growth is
expected in the low 30% range, higher than prior expectation in the
high 20% range. Organically, revenues are expected to grow in the
range of 8-9%, up from the 7% to 8% range originally forecasted. In
the second quarter also, reported sales are expected to increase in
the low 30% range.
Management expects adjusted total operating income percentage
growth rate in the low-40s for 2014, higher than prior expectation
of mid-30s percentage increase. Strong revenues and cost savings
are expected to fuel the margin expansion. Management expects a
similar operating income growth rate in the second quarter.
Adjusted diluted earnings per share are expected between 98
cents and 98 cents, much better than 90-94 cents expected earlier,
excluding investments in the Chinese joint venture. For the second
quarter, management expects adjusted diluted earnings per share to
range within 21 to 22 cents, excluding the China joint venture
Management also expects to increase production capacity in both
North America and Europe this year to support the
better-than-expected volume growth that the company has been
Other Stocks to Consider
Other food/beverage companies that can be considered include
Coca-Cola Enterprises, Inc.
B&G Foods, Inc.
The Hain Celestial Group, Inc.
). All the three stocks carry a Zacks Rank #2 (Buy).
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WHITEWAVE FOODS (WWAV): Free Stock Analysis
COCA-COLA ENTRP (CCE): Free Stock Analysis
HAIN CELESTIAL (HAIN): Free Stock Analysis
B&G FOODS CL-A (BGS): Free Stock Analysis
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