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Wells Fargo Downgrades WhiteWave Foods to ‘Market Perform’

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Price movement

WhiteWave Foods Company (WWAV) has a market cap of $9.8 billion. It rose by 0.27% to close at $55.27 per share on August 17, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -0.34%, -0.63%, and 42.1%, respectively, on the same day. WWAV is trading 0.32% below its 20-day moving average, 7.4% above its 50-day moving average, and 29.5% above its 200-day moving average.

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Related ETF and peers

The Vanguard Small-Cap ETF (VB) invests 0.26% of its holdings in WhiteWave Foods. The ETF tracks the CRSP US Small Cap Index. The market-cap-weighted index includes the bottom 2%–15% of the investable universe. The YTD price movement of VB was 10.3% on August 17.

The market caps of WhiteWave Foods’ competitors are as follows:

  • Kraft Heinz Company (KHC): $108.8 billion
  • General Mills (GIS): $42.1 billion
  • Hain Celestial Group (HAIN): $3.9 billion

WhiteWave Foods’ rating

Wells Fargo has downgraded WhiteWave Foods’ rating to “market perform” from “outperform.”

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Performance of WhiteWave Foods in 2Q16

WhiteWave Foods reported 2Q16 net sales of $1.0 billion, a rise of 13.6% compared to net sales of $923.6 million in 2Q15. Sales from Americas Foods & Beverages and Europe Foods & Beverages rose by 13.6% and 14.0%, respectively, in 2Q16 compared to 2Q15. The company’s gross profit margin fell by 0.08%, and its operating income rose by 30.9% in 2Q16 compared to 2Q15.

Its net income and EPS (earnings per share) rose to $51.8 million and $0.29, respectively, in 2Q16 compared to $37.4 million and $0.21, respectively, in 2Q15. It reported adjusted EBITDA[1. earnings before interest, taxes, depreciation, and amortization] and adjusted EPS of $143.0 million and $0.31, respectively, in 2Q16, a rise of 23.9% and 29.2%, respectively, compared to 2Q15.

WWAV’s cash and cash equivalents and inventories rose by 66.6% and 9.0%, respectively, in 2Q16 compared to 4Q15. Its current ratio rose to 1.2x, and its debt-to-equity ratio fell to 2.2x in 2Q16 compared to a current ratio and a debt-to-equity ratio of 1.0x and 2.5x, respectively, in 4Q15.

Projections

WhiteWave Foods has made the following projections for fiscal 2016:

  • net sales growth in the range of 10.5%–11.5%
  • adjusted total operating income growth in the high teens to 20%
  • adjusted EPS in the range of $1.32–$1.35
  • adjusted EPS in the range of $1.38–$1.41, which excludes the China joint venture

Now we’ll look at Johnson Controls.

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