Update: WhiteWave Earnings

| About: WhiteWave Foods (WWAV)


The company beat 2Q consensus on the top and bottom lines.

We still remain bullish on the company given the long-term prospects of plant-based beverages and its entry into other natural foods areas.

We anticipated the recent earnings beat given the company’s market share gains and performance despite the customer taste shift from soy milk to almond milk.

WhiteWave Foods (NYSE:WWAV) managed to post 2Q earnings that were $0.23 a share (beating $0.22 consensus) and revenues were $838 million (compared to $815.5 million consensus). Earnings were up 42% y/y and sales were up 36% y/y.

Shares of WhiteWave are up 86% since we first covered the stock back in September of last year. At the time, we slapped a $37 price target on the company -- we're still 7% off that. As we noted in September,

Margin growth. Another major tailwind, specifically for earnings growth, will be margin expansion. This directly ties into our operating margin expansion projection from 7.5% in 2012 to 9.6% in 2015 (see the valuation section). Driving this will be a combination of cost reduction initiatives and portfolio mix. For the latter, cost reduction, WWAV has a CapEx program that is set to add six filling lines to plants across its network, ultimately increasing production capacity by over 20%.

Operating margin is up to 7.9% for the TTM. Management noted that its supply chain investments are helping it drive margin expansion. Full year 2014 EPS is now expected to come in between $0.98 and $1.00, representing 33 y/y growth from 2013.

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