Diamond Foods (Nasdaq:DMND)
is trying to get back on solid footing after a series of self-inflicted
wounds threatened the survival (or at least the independence) of the
company not so long ago. While rehashing the company's accounting issues
and strategic missteps is beyond the scope of this article, the fact
remains that Diamond Foods is still in the middle of its clean-up
operations. Valuing these shares is tricky given all the factors at
work, but they do appear undervalued provided that the company can
continue to repair its margins and clean up its capital structure.
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Showing posts with label Diamond Foods. Show all posts
Showing posts with label Diamond Foods. Show all posts
Tuesday, June 11, 2013
Friday, April 27, 2012
Investopedia: Kellogg Looking Pretty Stale For Now
Cereal and snack food giant Kellogg (NYSE:K)
has taken a very sharp turn from one of the best (and most reliable)
food company stocks out there to a "what the heck is wrong here?" story.
With European sales down double-digits and share losses in the core
cereal group, to say nothing of the challenges of integrating and
building up Pringles, Kellogg has a lot to prove before it becomes a
dependable food stock again.
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Continue reading here:
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Tuesday, February 21, 2012
Investopedia: Pringles Is A Big Bite For Kellogg
Give credit where due; Procter & Gamble (NYSE:PG) lost no time moping about the disintegration of its deal with Diamond Foods (Nasdaq:DMND) to sell its Pringles business in a complicated $2.4 billion. In short order, P&G found a willing buyer and will be selling this iconic potato chip business to Kellogg (NYSE:K) for about $2.7 billion in cash.
The Terms of the Deal
Unlike the convoluted reverse Morris Trust structure that Diamond and Procter & Gamble were going to use to save taxes for P&G, the Kellogg deal is much more straightforward. Kellogg will pay $2.7 billion in cash - actually a bit of a discount to what Kellogg would have had to pay to match the after-tax price that Diamond was originally offering.
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The Terms of the Deal
Unlike the convoluted reverse Morris Trust structure that Diamond and Procter & Gamble were going to use to save taxes for P&G, the Kellogg deal is much more straightforward. Kellogg will pay $2.7 billion in cash - actually a bit of a discount to what Kellogg would have had to pay to match the after-tax price that Diamond was originally offering.
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Thursday, November 3, 2011
Investopedia: Has Kraft Saved The Best For Last?
One of the sell-side analysts whom I follow, has made the comment before that Kraft (NYSE:KFT) has long struggled to walk and chew bubblegum at the same time. Now in the wake of the company's announcement that it will split up, it feels a little ironic that the pieces seem to be working together a little better. Although Kraft shares don't represent a huge value today, investors could see trading opportunities around the split, as institutional shareholders choose sides between the higher-growth snack business and the higher-income grocery business.
A Solid Third Quarter
Maybe it seems strange to get excited that Kraft beat its revenue estimate by 3%, but with a company of this size, where sales data is available on a monthly, or weekly basis, there usually isn't all that much wiggle room. All the same, Kraft reported that revenue rose almost 12% with organic growth of over 8%. Overseas markets are driving good growth as well, as North American revenue was up just a bit more than 4%. One interesting note is that Kraft posted over 1% growth in volume and 7% growth in prices, suggesting that customers are finally accepting higher prices and sticking with brands they like, despite the hikes.
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A Solid Third Quarter
Maybe it seems strange to get excited that Kraft beat its revenue estimate by 3%, but with a company of this size, where sales data is available on a monthly, or weekly basis, there usually isn't all that much wiggle room. All the same, Kraft reported that revenue rose almost 12% with organic growth of over 8%. Overseas markets are driving good growth as well, as North American revenue was up just a bit more than 4%. One interesting note is that Kraft posted over 1% growth in volume and 7% growth in prices, suggesting that customers are finally accepting higher prices and sticking with brands they like, despite the hikes.
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Friday, October 14, 2011
Investopedia: PepsiCo Really Close Now
If there's anything good about widespread market routes, it's that they can often bring expensive stocks back to a more palatable price. That's perhaps the most significant takeaway from PepsiCo's (NYSE:PEP) third quarter earnings; while business continues to move along apace, the stock is finally at a point where long-term investors may see some real value.
A Decent Fiscal Third Quarter
The market seemed to be girding itself for a bad performance, but PepsiCo did alright. Revenue rose more than 13% as reported, with organic growth in excess of 5%. With worldwide organic snack volume growth of 3%, and beverage volume growth of 1%. It's clear that Pepsi products are still finding their way into shopping carts, but the company hasn't really pushed as hard on pricing as other food and beverage companies.
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A Decent Fiscal Third Quarter
The market seemed to be girding itself for a bad performance, but PepsiCo did alright. Revenue rose more than 13% as reported, with organic growth in excess of 5%. With worldwide organic snack volume growth of 3%, and beverage volume growth of 1%. It's clear that Pepsi products are still finding their way into shopping carts, but the company hasn't really pushed as hard on pricing as other food and beverage companies.
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Friday, September 23, 2011
Investopedia: ConAgra Chooses To Move On
There is little doubt that ConAgra (NYSE:CAG) needs to change quite a few things about how it operates - the company has long been a mediocre collection of me-too brands in the packaged food space. Nevertheless, management deserves credit for walking away from a Ralcorp (NYSE:RAH) deal that was likely to get too expensive. What remains to be seen now is whether management can find new value-additive strategies to improve the business or whether less imaginative steps like debt reduction and share buybacks will be the order the day.
First Quarter Financials Still Problematic
ConAgra reported sales growth nearly 10% to open this fiscal year, but overall performance was still not so great. Consumer sales were up more than 4% on a reported basis and the company reported that volumes were flat despite ongoing price increases. That's a solid improvement for ConAgra; the bear thesis on the stock has been that its lack of brand strength puts it in a more vulnerable position vis-à-vis Kraft (NYSE:KFT), Heinz (NYSE:HNZ), General Mills (NYSE:GIS) and the like when it comes to pushing price increases.
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First Quarter Financials Still Problematic
ConAgra reported sales growth nearly 10% to open this fiscal year, but overall performance was still not so great. Consumer sales were up more than 4% on a reported basis and the company reported that volumes were flat despite ongoing price increases. That's a solid improvement for ConAgra; the bear thesis on the stock has been that its lack of brand strength puts it in a more vulnerable position vis-à-vis Kraft (NYSE:KFT), Heinz (NYSE:HNZ), General Mills (NYSE:GIS) and the like when it comes to pushing price increases.
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Tuesday, August 9, 2011
Investopedia: Kraft Hopes Two Is Better Than One
As food companies go, Kraft Foods (NYSE:KFT) has done alright over the past couple of years. Despite the controversy over the company's aggressive move to bring Cadbury into the fold, Kraft has basically matched the market, done better than rival Kellogg (NYSE:K), and kept pace with the likes of ConAgra (NYSE:CAG) and Unilever (NYSE:UL). The question now is whether a dramatic restructuring of the business is going to significantly improve growth and shareholder value, or whether it's simply a distraction to buy time for a management team that doesn't appear to earn its cost of capital.
Q2 Not as Strong as It Seems
Wall Street seemed oddly pleased with Kraft's second quarter earnings. True, the company did beat the average estimate by a healthy margin and surpassed even the high end of the range. What's more, reported growth of over 13% and organic growth of over 7% is quite good for a huge food company (Kraft is second-largest in the world behind Nestle (Nasdaq:NSRGY). Still, volume growth was less than 2% and the better-than 5% boost to price and mix was helped by a calendar artifact.
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Q2 Not as Strong as It Seems
Wall Street seemed oddly pleased with Kraft's second quarter earnings. True, the company did beat the average estimate by a healthy margin and surpassed even the high end of the range. What's more, reported growth of over 13% and organic growth of over 7% is quite good for a huge food company (Kraft is second-largest in the world behind Nestle (Nasdaq:NSRGY). Still, volume growth was less than 2% and the better-than 5% boost to price and mix was helped by a calendar artifact.
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Tuesday, July 19, 2011
Investopedia: Ralcorp Adds Both Clarity And Confusion
There is no doubt that Ralcorp (NYSE:RAH) is getting creative in its efforts to get value for its assets. Still not willing to agree to ConAgra's (NYSE:CAG) bid, Ralcorp apparently believes that separating the company may be its best chance at guaranteeing greater value for its shareholder base.
First, a Warning
Ralcorp led off its Thursday night announcements with a warning on fiscal third quarter results. Citing weak volumes in cereal and some difficulty in getting better pricing through, Ralcorp lowered its guidance for the third quarter to a range of $1.13 to $1.18 - well below the $1.37 average estimate. Just as a point of reference, investors should also note that the lowest published estimate was $1.28, so this was indeed a meaningful miss.
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First, a Warning
Ralcorp led off its Thursday night announcements with a warning on fiscal third quarter results. Citing weak volumes in cereal and some difficulty in getting better pricing through, Ralcorp lowered its guidance for the third quarter to a range of $1.13 to $1.18 - well below the $1.37 average estimate. Just as a point of reference, investors should also note that the lowest published estimate was $1.28, so this was indeed a meaningful miss.
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Thursday, April 7, 2011
Investopedia: Diamond Foods Adds A New Facet
It was not that long ago when Diamond Foods (Nasdaq: DMND) was just a nut company with some clever commercials. Given the corporate maneuvers of the past few years, though, it is clear that management has goals and aspirations of becoming much more. With larger food companies apparently always on the lookout for ways to "manage" their brand portfolio, Tuesday's deal for Pringles may not be the last deal for this company.
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The Terms of the Deal
Diamond Foods and Procter & Gamble (NYSE:PG) announced a deal whereby Diamond will acquire the Pringles brand and business in a somewhat convoluted split-off transaction called a reverse Morris Trust deal. Diamond will paying $2.35 billion for Pringles, with the deal to be structured around $1.5 billion of stock (29.1 million shares) and the assumption of $850 million in debt. There will be collars on the deal, though, that could move the debt portion up or down depending on the performance of DMND shares before the close of the deal.
As part of the deal terms, PG shareholders will have the option to exchange their shares in PG for DMND if they so choose. One way or another, current Diamond shareholders will own about 43% of the new company, so this clearly a large transaction for the company. (For more, see Mergers And Acquisitions: Understanding Takeovers.)
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