Shares of Dean Foods Company (NYSE: DF) fell 26.7% in August, according to data from S&P Global Market Intelligence, after the food and beverage specialist announced disappointing quarterly results and the resignation of its chief financial officer.
Continue Reading Below
More specifically, Dean Foods stock plummeted more than 20% on Aug. 8, the first trading day after its second-quarter 2017 report. In it, Dean Foods confirmed that revenue had climbed a modest 4.2% year over year to $1.93 billion, while adjusted net income dropped 43% to $19.6 million, or $0.21 per share. By comparison, consensus estimates had predicted adjusted net income of $0.31 per share on slightly higher revenue of $1.94 billion.
"In the second quarter, we faced a challenging and rapidly evolving retail environment," explained Dean Foods CEO Ralph Scozzafava. "We experienced volume pressure from both a macro and competitive perspective that impacted our total volume performance within the quarter, and we anticipate this will carry forward for the remainder of 2017."
Even so, Scozzafava insisted that Dean Foods is "determined to improve our execution" and is in the process of accelerating aggressive cost-savings initiatives to better position itself.
But it didn't help matters on Aug. 22, when Dean Foods announced that CFO Chris Bellairs would depart from the company, effective Sept. 1. To be fair, Dean Foods clarified that Bellairs' departure was "not related to any issues regarding the integrity of the company's financial statements or accounting policies or practices."
Looking ahead to the full year, Dean Foods also warned that volume and mix challenges are occurring at a higher-than-planned rate. As such, given the resulting volume shortages, Dean Foods reduced its 2017 guidance for adjusted earnings per share to be in the range of $0.80 to $0.95, down from $1.35 to $1.55 previously.
After combining Dean Foods' executive turnover with its relative underperformance and outlook reduction, it was no surprise to see the stock fall so hard last month.
10 stocks we like better than Dean FoodsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Dean Foods wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of September 5, 2017