DF - Embedded Expectations Analysis - 2018 10 15
Dean Foods Company (DF:USA) currently trades at historical lows relative toUAFRS-based (Uniform) Assets, with a 0.8x Uniform P/B. At these levels, the market has muted expectations for the firm, while management has concerns about their plant consolidation initiative, rising costs, and guidance targets
Specifically, management may lack confidence in their ability to mitigate costs, specifically in H2 2018, and to meet their EPS guidance. Moreover, they may lack confidence in their ability to increase volume from their customer transition initiatives, and to efficiently consolidate their plants while maintaining costs. Additionally, they may be concerned about their ability to replicate the success they had with Silk with their new Good Karma platform. Furthermore, they may lack confidence in their ability to achieve strong results in Q4 2018, and may be concerned about all of the work ahead of them in Q3 2018. They may also lack confidence in their decision to partner with Organic Valley, and in the sustainability of demand for their DailyPure line. In addition, they may be exaggerating their focus on creating shareholder value, and may lack confidence in their ability create value through new tool creation. Finally, they may lack confidence in their ability to complete their consolidations by the end of Q3 2018, and to reverse recent declines in operating income
Dean Foods is a food and beverage company and a processor and direct-to-store distributor of fluid milk and other dairy and dairy case products. The company manufactures, markets and distributes a branded and private label dairy and dairy case products, including fluid milk, ice cream, cultured dairy products, creamers, ice cream mix and other dairy products to retailers, educational institutions and governmental entities. The company's portfolio includes DairyPure?, and TruMoo? flavored milk brand, along with dairy brands such as Alta Dena ?, Berkeley Farms ?, Country Fresh ?, Dean's ?, Friendly's ?, Lehigh Valley Dairy Farms ?, and more. The company also makes and distributes juices, teas and bottled water.
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