Shares of WhiteWave Foods (WWAV, Financial) have risen by 124% since it went public in January 2013. This is a commendable gain for a new company. WhiteWave sells premium organic products and mainly caters to health-conscious consumers. Also, it was able to beat the Street's estimates in each of the last four quarters. Further, its recently reported third quarter results were also a blockbuster one. The numbers were ahead of analysts expectations, driving share prices up.Â
The blockbuster quarter
Sales surged 34% to $857 million, as compared to the prior year. This was higher than the estimate of $843 million. The most important contributor to the sales increase was the acquisition of Earthbound Farms, which helped the top line grow. Earthbound Farms, acquired in January this year, is the largest producer of organic ingredients. Therefore, this buyout was a strategic fit for the retailer.
Even if we exclude the effect of the addition of the new business, organic growth stood at 12%. Revenue was driven by growth across all the segments of the company. Also, some pricing actions, increased scale of production and higher demand for organic food helped the top line grow.Â
Moreover, WhiteWave Foods witnessed growth in Europe and the U.S. The European region registered a growth of 24%, driven by higher volumes of non-dairy yogurts, soy beverages and plant-based almond beverages. Also, North America reported an increase of 36% in sales, which is remarkable. Even if we negate the effect of Earthbound Farms, revenue jumped a healthy 10%.
Some of the company's popular brands are International Delight, Horizon Organic, Provamel and Earthbound Farm. The silk almond milk also resonated well with the customers, registering a growth of 45% over the prior year.
The bottom line was also impressive, as the earnings jumped to $0.27 per share from $0.19 per share over the year-ago quarter. Analysts were expecting the earnings to be at $0.26 per share. The organic food retailer managed its costs efficiently.
The road ahead
WhiteWave Foods' acquisition of Earthbound Farm was one of the most interesting steps to grow its business. This buyout is expected to continue to benefit the retailer in the coming months. It will also strengthen its presence in the organic food market.
Another acquisition, which is awaited by its investors, is that of So Delicious Dairy Free, announced in September. So Delicious sells dairy free desserts to customers and are non-GMO verified. This new addition to WhiteWave's portfolio should further help in its growth.
My take
It is quite clear that WhiteWave Foods is on the right track. Its strategic initiatives to grow and expand its list of offerings as well as its geographic presence, makes this company an impressive pick. Moreover, it hasn’t only registered a great quarter, but also revised its earnings guidance upward. A blockbuster quarter, well-made acquisitions, and growth across all the regions, make this organic food retailer a rewarding pick.
