Dean Foods Upped To Rank #1 On Solid Q1: Stock To Gain?

On May 26, 2016, Zacks Investment Research upgraded Texas-based milk and other dairy products company, Dean Foods Company (NYSE:DF) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Dean Foods recently posted first-quarter 2016 results, wherein both the top and bottom lines beat the Zacks Consensus Estimate, and earnings also exceeded management’s guidance. Shares of the company have gained 2.2% since the earnings announcement.

A look at the company’s earnings history reveals that the bottom line has outperformed the Zacks Consensus Estimate for five consecutive quarters, by an average of 17.8% over the trailing four quarters. Apart from this, the first quarter also marked Dean Foods’ fifth straight year-over-year improvement in earnings, gross profit and adjusted operating income.

Results mainly benefited from lower milk costs and robust execution across all business operations. The company remains impressed with its progress, given its solid operational and financial results, and is optimistic about carrying this momentum forward in the future.

We believe that all the aforementioned factors led to the upward revisions in Dean Foods’ earnings estimates as analysts have become more constructive on the stock’s future performance. Evidently, the Zacks Consensus Estimate jumped 14.2% to $1.53 for 2016 and 3.6% to $1.43 for 2017 over the past 30 days.

Additionally, Dean Foods remains focused on taking strategic steps to optimize its capital allocation and concentrate on core business activities. The company’s strategic measures, which are focused on three controllable factors – price realization, cost productivity and volumes at margins, are likely to aid in delivering appropriate returns even in the face of industry headwinds.

Stocks to Consider

Other well-ranked stocks in the Consumer Staples space include Post Holdings, Inc. (NYSE:POST) , B&G Foods Inc. (NYSE:BGS) and Omega Protein Corporation (NYSE:OME) , each sporting a Zacks Rank #1.

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DEAN FOODS CO (DF): Free Stock Analysis Report

B&G FOODS CL-A (BGS): Free Stock Analysis Report

OMEGA PROTEIN (OME): Free Stock Analysis Report

POST HOLDINGS (POST): Free Stock Analysis Report

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Zacks Investment Research