Fresh produce is one of those industries where margins and free cash flow generation are typically poor across the board. Dole Food (DOLE), Chiquita Brands (CQB), and Fresh Del Monte (FDP)
all have struggled to generate attractive margins over the long term.
Even so, this sector can offer good capital appreciation potential when
bought/sold opportunistically.
Calavo Growers (CVGW)
is an interesting story right now. Although the shares do look
expensive, management has some ambitious plans to diversify the
business, further leverage its fresh produce capacity, and consolidate
the fresh produce space (at least on a limited basis). The company is
also trying to increase the percentage of value-added products it sells,
while simultaneously launching an overnight fresh produce/meal
business. With those initiatives in place, the possibility certainly
exists that Calavo could deliver positive revenue and margin surprises
and redeem what otherwise looks like a stretched valuation.
Please follow this link to read more:
Calavo Growers Presents A Tricky Growth/Value Trade-Off
Showing posts with label Fresh Del Monte. Show all posts
Showing posts with label Fresh Del Monte. Show all posts
Thursday, October 10, 2013
Thursday, May 10, 2012
Investopedia: Poor Margins Go To Chiquita's Core
Investing in companies that produce agricultural products is almost
always dicey; few of these companies can control either end-market
pricing or input costs. Not surprisingly, companies like Dole (NYSE:DOLE), Fresh Del Monte (NYSE:FDP) and Chiquita (NYSE:CQB)
don't score especially high on measures of long-term economic value
creation. That said, aggressive investors can often do reasonably well
in these stocks by trading the huge swings in sentiment.
Continue here:
http://stocks.investopedia.
Continue here:
http://stocks.investopedia.
Monday, July 4, 2011
Investopedia: High Expectations In Place For McCormick
Spice and seasoning leader McCormick (NYSE:MKC) has some interesting challenges these days. On one hand, the company has a great franchise in its core spice and seasoning business, albeit a franchise that is challenged today with higher input costs and competition from private labels. Likewise, while the company has the potential to grow its business by expanding further into packaged food categories like boxed meals, companies like ConAgra (NYSE:CAG) and General Mills (NYSE:GIS) have demonstrated lately that success in packaged food is hardly easy.
A Solid Second Quarter
Even if this is a tough stretch for food companies, McCormick didn't show any weakness on the top line. Helped in part by currency and pricing, McCormick delivered 11% growth this quarter (8% in constant currency) and beat the high end of the analyst range. Perhaps its a sign of McCormick's brand power that the company was able to register both a 5% boost in pricing and a 3% increase in volume - other companies like General Mills have recently found that price increases usually take a toll on volumes.
While McCormick did offer good news on the top line, profitability was less impressive. The company saw gross margin slide more than a point as input costs took their toll. McCormick captured some of this back through the operating line, and operating income rose more than 12%, but overall the bottom line performance was not so spectacular given the top line outperformance.
To read the full piece, please click below:
http://stocks.investopedia.
A Solid Second Quarter
Even if this is a tough stretch for food companies, McCormick didn't show any weakness on the top line. Helped in part by currency and pricing, McCormick delivered 11% growth this quarter (8% in constant currency) and beat the high end of the analyst range. Perhaps its a sign of McCormick's brand power that the company was able to register both a 5% boost in pricing and a 3% increase in volume - other companies like General Mills have recently found that price increases usually take a toll on volumes.
While McCormick did offer good news on the top line, profitability was less impressive. The company saw gross margin slide more than a point as input costs took their toll. McCormick captured some of this back through the operating line, and operating income rose more than 12%, but overall the bottom line performance was not so spectacular given the top line outperformance.
To read the full piece, please click below:
http://stocks.investopedia.
Monday, April 25, 2011
Investopedia: Chipotle Still Smokin'
Like the smoked jalapeno it's named after, Chipotle Mexican Grill (NYSE:CMG) offers more than just heat. Chipotle continues to post eye-popping traffic growth and strong margins, and there still looks to be plenty of expansion potential. It is also worth noting, though, that Chipotle sports a valuation that may be too spicy for even the boldest growth investors.
Another Great Quarter
Chipotle once again delivered impressive growth, exceeding the high end of the analyst range with 24% overall growth and nearly $510 million in revenue. While new store openings continue to be an important part of the story, the existing outlets are doing exceptionally well too - same-store sales growth was 12.4% for the first quarter, with higher pricing chipping in less than 1%. (For more, see Should Investors Ignore Monthly Sales?)
Profitability was a little more mixed, but still good news for the most part. Store-level margins contracted almost a full point, but still stand at an impressive 25.2%. Similarly, operating margin contracted a bit (from 15% to 14.7%), but operating income growth was still 22%. Growth was restrained a bit by promotional expenses tied to a buy-one-get-one-free offer, as well as higher food costs.
To read the full version, please go here:
http://stocks.investopedia.
Another Great Quarter
Chipotle once again delivered impressive growth, exceeding the high end of the analyst range with 24% overall growth and nearly $510 million in revenue. While new store openings continue to be an important part of the story, the existing outlets are doing exceptionally well too - same-store sales growth was 12.4% for the first quarter, with higher pricing chipping in less than 1%. (For more, see Should Investors Ignore Monthly Sales?)
Profitability was a little more mixed, but still good news for the most part. Store-level margins contracted almost a full point, but still stand at an impressive 25.2%. Similarly, operating margin contracted a bit (from 15% to 14.7%), but operating income growth was still 22%. Growth was restrained a bit by promotional expenses tied to a buy-one-get-one-free offer, as well as higher food costs.
To read the full version, please go here:
http://stocks.investopedia.
Monday, February 28, 2011
Seeking Alpha: The Tradeoff Of Processed Foods: Less Nutritious, Better Investment
Processed foods get a bad rap. They are often loaded with salt and sugar, low in fiber, and generally deficient in vitamins and nutrients when compared to fresh food. As processed foods are so often energy-dense and affordable, nutritionists have frequently implicated them in the rising rates of obesity and hypertension in the United States.
But there is another, often underappreciated, angle to processed foods – they have largely eliminated the problem of food security in much of the Western world. Though soaring food costs appear to be one of the proximate causes of social unrest in North Africa, and a major concern in countries like Indonesia, India, and sub-Saharan Africa, there has been barely a ripple in the United States or Western Europe.
The Hormel Example
Hormel (HRL) is a case in a point for the economics of processed food. Corn prices have nearly doubled since late 2009, soybeans and hogs are up more than 50%, and the cost of metal packaging, transportation, and other inputs have all been on the way up. Nevertheless, Hormel's profits have been growing over that same time period and the company raised its 2011 guidance by 5% when it recently reported earnings.
Please continue on through the link below:
http://seekingalpha.com/article/255295-the-tradeoff-of-processed-foods-less-nutritious-better-investment
But there is another, often underappreciated, angle to processed foods – they have largely eliminated the problem of food security in much of the Western world. Though soaring food costs appear to be one of the proximate causes of social unrest in North Africa, and a major concern in countries like Indonesia, India, and sub-Saharan Africa, there has been barely a ripple in the United States or Western Europe.
The Hormel Example
Hormel (HRL) is a case in a point for the economics of processed food. Corn prices have nearly doubled since late 2009, soybeans and hogs are up more than 50%, and the cost of metal packaging, transportation, and other inputs have all been on the way up. Nevertheless, Hormel's profits have been growing over that same time period and the company raised its 2011 guidance by 5% when it recently reported earnings.
Please continue on through the link below:
http://seekingalpha.com/article/255295-the-tradeoff-of-processed-foods-less-nutritious-better-investment
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