Dean Foods Corp (DF) has missed the Zacks Consensus Estimate in each of the last five quarters. DF is a Zacks Rank #5 (Strong Sell), and it is the Bear of the Day.
Dean Foods Company is a food and beverage company that processes and distributes milk and other dairy products in the United States. The company offers its products under approximately 50 local and regional proprietary or licensed brands and private labels, such as the TruMoo, Alta Dena, Berkeley Farms, Country Fresh, Dean's, Garelick Farms, LAND O LAKES, Lehigh Valley Dairy Farms, Mayfield, McArthur, Meadow Gold, Oak Farms, PET, T.G.Lee, Tuscan, and others. Dean Foods Company was founded in 1925 and is headquartered in Dallas, Texas.
Shorty Shorting This Short
In the Bull of the Day I talked about the change in short interest and how the stock performed over the last month. With DF, we have a completely different story.
Over the month of July, DF is down by a little more than 13%. That is just what the shorts want to see... but what have they done with their positions?
The data shows that there were 10.3M shares sold short at the end of June and that number jumped to 13.8M shares sold short by the end of July. Due to significant daily volume, the days to cover moved up from 3.6 to 5.1.
Recent Earnings Reports
The most recent report saw DF come in $0.09 below the Zacks Consensus Estimate. The company reported $2.39B vs. the $2.34B revenue estimate for a beat of $53M or a 2% positive revenue surprise.
The valuation for is not at all attractive for a stock that has missed five quarters in a row. A trailing PE of 30x is 50% higher than the industry average and the forward PE of 33x shows an even bigger premium to the 18x industry average.
The price and consensus chart is a very helpful tool developed by Zacks. It shows how the earnings estimates help guide the stock, so as estimates move higher, the stock price generally follows along. DF follows this pattern with a defined trend lower in the stock that moves in lock step with the estimates. Investors would be wise to wait for estimates to start moving higher before investing in this stock.
Follow Brian Bolan on twitter at @BBolan1
Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Home Run Investor service, a Buy and Hold service where he recommends the stocks in the portfolio.