Fresh Del Monte Produce (FDP) has seen a big rise in earnings estimates following its most recent quarter making it a Zacks #1 Rank (Strong Buy).
Fresh Del Monte Produce Inc. sells fresh and fresh-cut produce worldwide. It also offers prepared fruit and vegetables, juices, beverages, snacks, poultry, and meat products. It offers fresh produce primarily under the DEL MONTE brand, as well as under the UTC and Rosy names; and prepared fruits and vegetables, juices, beverages, and snacks under the DEL MONTE, Fruit Express, Just Juice, and Fruitini brands. Fresh Del Monte Produce Inc. was founded in 1886 and is based in George Town, Cayman Islands.
Fresh Del Monte Produce Meets or Beats the Estimate in Three of the Last Five Quarters
Fresh Del Monte Produce has met or topped the Zacks Consensus Estimate in three of the last five quarters. Despite the three beats, the stock only moved up two times in that time frame and moved lower by 1.9% on average over the last five quarters. Besides the most recent beat, the stock moved higher following the March 2011 earnings release.
In the March 2011 quarter, the stock rose nearly 1% following a 28% positive earnings surprise. The company reported earnings of $0.96, $0.21 more than the Zacks Consensus Estimate . Revenues of $974 million were approximately $27 more than the Zacks Consensus Estimate.
Fresh Del Monte Produce Most Recent Reported Earnings
On May 1, 2012 Fresh Del Monte Produce reported revenue of $898 million, roughly $48 million lower than the Zacks Consensus Estimate and down from $974 million reported in year ago quarter. In addition, earnings per share came in at $1.08, $0.26 higher than the Zacks Consensus Estimate of $0.82. The beat of 31% helped to propel the stock higher by about 6.5% in the session following the release.
Fresh Del Monte Produce Sees Estimates Moving Higher
Fresh Del Monte Produce has seen earnings estimates move higher following the recent positive earnings surprise. The Zacks Consensus Estimate for 2012 was $1.92 prior to the most recent earnings and has since moved to $2.22. That represents a to 2013 is approximately 16%.
Estimates for 2013 have also seen an increase following the most recent quarterly release. The Zacks Consensus Estimate for 2013 was $2.20 in April 2012. The current level is now $2.36, an increase of 7.3%.
The valuation for Fresh Del Monte Produce is very attractive. The stock trades at a discount to most of the major metrics that aggressive growth investors tend to look at. A trailing twelve months PE of 12x is below the industry average of 16x. The forward PE is just as attractive, with an 11x multiple comfortably below that of the 15x industry average. Price to book of 0.8x will bring in many value investors as well, and there is significant room for expansion for that multiple when compared to the industry average of 3.9x. Price to sales below 1x is often a bargain, but at 0.4x FDP should get thorough consideration on valuation alone.
A quick look at the chart shows a stock that has rebounded back to levels it was at near the start of the year. The stock was punished for an earnings miss for the December 2011 quarter. Given the recent history of the stock and the excellent valuation picture, it is possible that the stock can rally to reach new highs in the coming quarters. Consistently delivering positive earnings surprises will be the lynch-pin to success for this stock. Fresh Del Monte Produce is a Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service
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