Dean Foods Company’s Earnings Beat Consensus Estimates in 3Q15

In-Depth: How Dean Foods Improved Performance in 3Q15

(Continued from Prior Part)

Reported EPS rose by 20%

Dean Foods (DF) has been showing a trend of beating earnings estimates for the last two quarters in fiscal 2015. The expected earnings per share (or EPS) in 2Q15 were $0.17, but the company surprised investors with earnings of $0.24, beating estimates by 26.9%.

Further details

Dean Foods beat estimates in the third quarter by 20%. The consensus estimate for earnings was $0.25 per share while the company reported $0.30 per share. This was an improvement over the corresponding quarter a year ago when the company reported EPS of -$0.03.

Net profit rose by 4,211.5%, with Dean Foods reporting $26.5 million this quarter. This can be compared to the third quarter of 2014 when the company reported -$0.65 million as net income.

The analysts that follow Dean Foods are expecting it to grow earnings at an average annual rate of 10% over the next five years. This year, analysts are forecasting a rise in earnings of 957.1% over last year. Analysts expect earnings growth next year of -14.0% over this year’s forecast earnings.

Forward guidance for 4Q15

The management of Dean Foods noted in their press release that they plan to close fiscal 2015 with strong fourth quarter results. The continuation of commercial and brand initiatives, diligent cost focus, seasonal demand driving beneficial product mix, and an overall favorable commodity environment are all expected to contribute to better performance in the fourth quarter according to the press release.

Management expects adjusted diluted EPS in 4Q15 to be in the range of $0.28–$0.38 per share, leading the full-year 2015 adjusted diluted EPS to be in the range of $1.15–$1.25. This includes the accretive impact from the share repurchases in the third quarter.

The management of Dean Foods also expects full-year 2015 adjusted EBITDA to be ~$400 million, and their full-year capital expenditures to be ~$150 million. The company also projects annual net sales of ~$2.5 billion, or ~$4 billion when adding food service and other distribution outlets for their new brand, DairyPure, launched in the second quarter.

The company’s competitors in the industry include Kellogg (K), B&G Foods (BGS), and Kraft Heinz (KHC). They reported EPS of $0.58, $0.34, and $0.44, respectively, in their last quarter. The iShares Core S&P Mid-Cap ETF (IJH) invests 0.11% of its portfolio in the Dean Foods stock.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - How Did Dean Foods Company’s Stock React to Its Earnings Release?

• Part 2 - How Dean Foods Improved Performance in 3Q15

• Part 4 - Dean Foods Management’s View on 3Q15 Performance