WBD Foods: A Good Fit for Mid Cap Portfolios

May. 3.07 | About: Wimm-Bill-Dann Foods (WBD)

Two weeks ago, Clear Indexes began real-time publishing the Clear Mid Cap Growth Index and last week the ETF (MCG) began trading. The stock I discussed Thursday is a constituent of the index and it is also a holding in the Clear Mid Cap Growth portfolio, an actively managed, concentrated institutional separate account product.

Founded in 1992, Wimm-Bill-Dann (NYSE:WBD) is headquartered in Moscow, Russia. It provides dairy products that include traditional products, such as sterilized and pasteurized milk, butter, cream, kefir, cottage cheese, sour cream, yogurts, dairy desserts, as well as hard and processed cheese.

The company’s juice products include juice and nectars produced from juice concentrate, traditional berry-juice-based drink and bottled natural mineral water. It also produces baby food products, liquid dairy products for infants under the age of three. Meat, fish, chicken, fruit, and dairy purees for infants and products for pregnant women and nursing mothers are also produced.

WBD sells its products directly to retailers, including supermarkets, grocery shops and restaurants, in addition to independent distributors for re-sale to retail outlets. The company has 33 production facilities in Russia and the Commonwealth of Independent States [CIS]. Its affiliated trading companies operate in the 26 largest cities of Russia and the [CIS], with distributors working in more than 40 cities with 20,000 employees.

The business model has proven to be quite successful as evidenced by the financial results and growth posted by the company. WBD’s current market capitalization is about $3.7 billion and its annual revenue is at $1.76 billion. The growth data includes a year over year quarterly revenue increase of 36.40% during the most recent quarter and a 25.93% revenue increase over the past year. Net income grew 214.49% over the last year.

Despite being rated amongst the top five fast-growth stocks by TheStreet.com, WBD has maintained a 9.28% return on assets [ROA] and a robust return on equity [ROE] of 19.17% over the past twelve months which is in the top 50% of the Packaged Food & Meats industry. Its operating margin of 8.83% for the year is above the industry’s operating margin of 7.05%, which is another indicator of its ability to maintain superior profitability during its rapid growth.

Our multi-factor model continues to calculate that the valuation of the stock is at a reasonable level among its peers and other mid cap growth companies. Its trailing price to earnings to growth [PEG] ratio of 0.178 over the past year serves as a prime indicator.

Disclosure: Mr. Corn is CEO of both Clear Indexes LLC and Clear Asset Management LLC.
Wimm-Bill-Dann Foods is a constituent in the Clear Mid Cap Growth Index licensed for the ETF [MCG]. It is also a holding in the Clear Mid Cap Growth portfolio.
Mr. Corn owns shares of MCG and shares of the stock directly through his participation in the portfolio.

WBD 1-yr chart

WBD 1-yr chart