The WhiteWave Foods Company WWAV reached a new 52-week high of $49.73 on May 28. Shares of the company have been rising ever since it reported strong first-quarter 2015 results on May 8.
The company beat the Zacks Consensus Estimate for first-quarter earnings, while slightly missing the sales expectations.
Moreover, strong first-quarter results and expectations of continued growth momentum led management to raise the sales and earnings expectations for 2015 despite increased currency headwinds.
In fact, this natural, organic and plant-based food/beverages maker has delivered positive earnings surprises in six of the past seven quarters.
The Zacks Rank #2 (Buy) company saw earnings per share growth of 36% last year backed by innovation, increased scale, supply chain initiatives and pricing actions.
We believe that the company is poised well for this year, while its products enjoy strong demand due to the natural/organic food revolution. Shares surged 55% in 2014 and has gained 40% year-to-date.
Strong First Quarter Results
WhiteWave Foods’ first-quarter adjusted earnings per share (excluding investments related to a Chinese joint venture) of 24 cents per share beat the Zacks Consensus Estimate of 22 cents by 9.09% and were above the guided range of 20 cents to 22 cents.
Earnings grew 8% year over year driven by double-digit sales profit growth, despite heavier marketing costs. Excluding currency headwinds, constant currency earnings grew 12% year over year and surpassed the expected range of 21 cents to 23 cents.
Sales increased 10% year over year to $911 million which slightly missed the Zacks Consensus Estimate of $913 million. However, the top-line increase was above management’s expectation of an increase in a high single-digit range. Excluding currency headwinds of 3%, sales increased 13%, in line with expectations of low double-digit range. Strong organic growth and the So Delicious acquisition (fourth-quarter 2014) drove sales.
Organically (excluding So Delicious), revenues grew 10% as strong sales trends in the Americas and Europe foods and beverages segments offset a modest sales decline in the America's fresh food segment.
Despite increased marketing investments, adjusted operating profits grew 21% year over year (on a constant currency basis) to $78 million. Adjusted operating margins (excluding So Delicious) expanded 57 basis points driven by solid top-line growth, cost leverage from increased sales and realization of supply chain savings.
2015 Outlook Upped
Adjusted diluted earnings per share are now expected in the range of $1.10 to $1.14, higher than prior range of $1.08 to $1.12, excluding investments in the Chinese joint venture.
Excluding currency headwinds of 6 cents (previously 5 cents), constant currency earnings are expected in the range of $1.16 to $1.20, also better than $1.13 to $1.17 expected earlier.
For the full year, sales growth is expected in the low double-digit range, at the higher end of the prior expectation of high-single to low double-digit range. Excluding currency headwinds, sales growth is expected in a low-teens range, better than low double-digit range expected previously.
Adjusted total operating income growth is expected in the low-20s range, better than high-single to low double-digit range on a constant currency basis.
Second-Quarter Outlook
For the second quarter, management expects adjusted diluted earnings per share to range within 23 cents to 25 cents, excluding costs associated with the China joint venture. Excluding currency headwinds, constant currency earnings are expected within 25 cents to 27 cents.
In the second quarter, reported sales are expected to increase within high-single to low-double digits. Excluding currency headwinds, sales growth is expected in a low-teens range.
Operating profit is expected to increase in the range of high-teens to low-20s on a constant currency basis. The profit growth rate is expected to increase in the second half of the year.
Other Stocks to Consider
Other food/beverage companies that can be considered include Primo Water Corporation PRMW, Campbell Soup Company CPB and B&G Foods Inc. BGS. While B&G Foods sports a Zacks Rank #1 (Strong Buy), Primo Water and Campbell Soup carry a Zacks Rank #2.
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