Can WhiteWave Foods Keep Delivering Impressive Results?

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Oct 21, 2014

WhiteWave Foods (WWAV, Financial) is on a roller coaster ride after the company posted record results for the second quarter. WhiteWave Foods posted impressive growth in earnings, and its revenue grew by a big margin. The company performed well on the back of strong organic growth in North America and Europe. Further, management sees enough room for improving the margins. WhiteWave is focused on many key strategies, including expansion in the European market. Let us have a look at its strategic moves in detail.

Results and strategies

The recently reported second quarter witnessed robust operational performance by WhiteWave Foods. Its revenue rose by 39.5% to $837.9 million as compared to the same period a year ago. The revenue figures also topped consensus estimates of $815.65 million. On the earnings part, WhiteWave Foods posted EPS of $0.23 which topped analyst’s estimates of $0.22 per share.

Things seem rolling for WhiteWave Foods having delivered better than expected results in the second quarter. The management is pleased with the benefits that it is getting on the back of past strategic moves. Its Earthbound Farm acquisition is the most important part of WhiteWave’s robust performance. It is expecting this to continue yielding better benefits in the future. WhiteWave is focused on several other key initiatives to improve profitability. It is laser-focused on increasing its sales as well as altering its cost structure. WhiteWave is looking forward to building a strong growth momentum for the rest of the year.

Looking ahead

Moving forward, WhiteWave Foods has also announced an agreement to acquire So Delicious Dairy Free. This acquisition is expected to benefit WhiteWave foods in the long term. So Delicious is well known for its plant-based beverages, creamers, cultured products and frozen desserts.

WhiteWave Foods thinks that the acquisition of So Delicious will represent a great addition to WhiteWave’s portfolio and will fit squarely within its strategy of driving growth in its core businesses.

WhiteWave Foods is seeing many growth opportunities budding in Europe. The dairy alternative trend is slowly gaining traction in Europe and the company thinks that it is in its early stages of growth and will be a good market in the days to come. WhiteWave Foods is counting on plant-based yogurt as a primary growth driver in Europe and believes that it can unlock opportunities around the world for the company.

WhiteWave is pleased with the growth momentum and has also posted an upbeat guidance for the future, expecting tremendous growth in its top and bottom line. Moreover, WhiteWave is making significant investments, which it believes will deliver margin expansion over the balance of the year. The company thinks that it will help it to raise its EPS forecast for the next fiscal year. The company has plans to invest behind the brand as well to maintain its market leading position. It is striving continually to drive growth in its core products also developing new and innovative offerings to draw more customers to its categories which will help it to penetrate household segment.

Another growth driver for WhiteWave Foods is a China joint venture which is showing positive signs, and the company is pleased with the steady progress. Seeing this growth, the company is focusing much on the venture activities. With this progress, WhiteWave is confident about its long-term prospects.

Further, its new products are also seeing good reception in the market. However, initially its snacking line did face some competition but the company is pleased with the results that it came up with till this date. It expects that this new line of products will drive its sales higher in the coming days.

Conclusion

With a trailing P/E of 57.15, WhiteWave Foods looks slightly overvalued. But the forward P/E of 30.56 indicates good increase in earnings in the future. Its earnings for the next five years are slated to grow at a CAGR of 22.04% which is also more than the industry average. This also strengthens its long term prospects. Considering every aspect, I would like to suggest that the investors can definitely add WhiteWave Foods considering its strong financial position and strong long-term prospects.