Wednesday, February 10, 2010

Free-spendin' at Dean Foods leads to an earnings miss...(DF)

Food & beverage concern Dean Foods (DF) reported earnings results this morning that came in 6cents shy of Wall Street estimates, despite beating revenue expectations.

EPS for q42009 of 31cents per share was 6cents below the expected 37cents.

As for how they missed earnings when revenue came in higher and gross margin was up 1.3% year over year, look to their discussion of corporate expense, up huge:

Free Cash Flow as defined by Dean Foods would indicate a FCFY of about 12.2% - sounds juicy, but for a company as leveraged as this I'd demand more yield.  The 2017 debt yields about 7.6% right now, so I suppose the equity could yield as low as 10%?  That said, I'd rather buy the stock when it's yield has more room to fall.

Copyright 2010 AlphaNinja

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