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Dean Foods seen trading at fair value

May 08, 2019 1:42 PM ETDean Foods Company (DF)DFBy: Clark Schultz, SA News Editor7 Comments
  • Wells Fargo dissects Dean Foods (DF -2.6%) after the food company's Q1 earnings report and guidance update.
  • "The outlook features some positives (seq. EBIT improvement, positive FCF, new business wins) but we think weak volumes, expansive price gaps, and an inflationary bias to dairy costs maintain DF in a vulnerable position," warns WF analyst John Baumgartner.
  • Baumgartner says Dean is generally fairly valued by the market at 4.8X the firm's FY20 EBITDA estimate.
  • Wells has a Market Perform rating on Dean Foods and price target of $2.

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Comments (7)

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DF valuation keeps decreasing, anybody know what is the most recent catalyst?
Holmes Osborne profile picture
I feel that there is some potential with Dean but not based upon earnings and cash flows. The real estate has some value. It's the largest milk producer in the U.S. Dean could be a nice M&A candidate for a larger food company.
Pretty high EV still, possible that it gets taken over but the premium might not be the greatest
Dean Foods (DF) PT Lowered to $3.50 at BMO Capital


1 day ago - BMO Capital analyst Amit Sharma lowered the price target on Dean Foods (NYSE: DF) to $3.50 (from $4.00) while maintaining a Market ...
gregory.lynn profile picture
How does he even know what ebitda will be? All we know is FCF positive and trading at 0.2x sales and 0.2x book value.
Wells Fargo analyst is a clown. He was pissed that Dean did not give him more detail numbers. He is probably short and can't believe DF will be cash flow positive quarters 2, 3, 4 and FY19. My guess is WF is expecting some type of a transaction soon that will justify the cash flow numbers. Of course, Dean can't say something that hasn't happened yet. These analysts have to be more forward thinking.
Fa sho!
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