Shares of Dean Foods Company (DF) hit a 52-week high of $19.35 on Dec 26, 2014, before eventually closing at $19.23. The closing price represents a year-to-date return of 14.7%. The company has been riding on its strategic initiatives, solid financial status and upward estimate revisions, all underscoring its inherent strength.
Dean Foods has been taking strategic steps to optimize its capital allocation and concentrate on core business activities. In the face of industry headwinds, the company remains primarily focused on three controllable factors – price realization, cost productivity and volumes at high margins that will deliver appropriate returns.
The company has benefited from its constant focus on cost-reduction initiatives, such as lowering of headcounts across businesses and the closure of its plant network. In the third quarter of 2014, the company closed 12 manufacturing facilities since the launch of these measures in late 2012. With these efforts underway, Dean Foods expects to lower its per-unit production rate and distribution costs that will ultimately benefit its bottom-line results.
Also, this Zacks Rank #3 (Hold) company enjoys a strong financial status. During the first three quarters of 2014, the company generated $48.1 million of net cash from continuing operations. Moreover, its regular dividend payments and recent senior notes redemption further highlight its healthy financial status, also reflecting its commitment toward enhancing shareholder value.
Coming to its earnings results, the company posted narrower-than-expected loss in third-quarter 2014, driven by the success of its business efforts despite a tough dairy commodity environment. Additionally, the company is optimistic about the fourth quarter since its strategic initiatives seem to be paying off. These factors have led to an upside trend in the Zacks Consensus Estimate for the fourth quarter and full year 2014, over the past 60 days.
We believe that all the aforementioned factors speak positively about the company and hint at its growth prospects, thus boosting investors’ confidence.
Apart from Dean Foods, Ralph Lauren Corp. (RL), Newell Rubbermaid Inc. (NWL) and L Brands, Inc. (LB) also hit 52-week highs of $185.92, $38.57 and $86.08, respectively, on Dec 26, 2014.
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