Why Dean Foods Shares Got Dumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Dean Foods were looking rotten today, falling as much as 11% after the company's forecast disappointed the market in its quarterly report.

So what: Fourth-quarter results were strong, as the nation's leading milk producer grew earnings 48% to $0.40 a share, well ahead of estimates at $0.30, but its first-quarter EPS outlook was just $0.22 to $0.27 a share against expectations of $0.30. Revenues also missed the mark as Dean grew sales 3% to $3.0 billion, though the company lost some revenue by spinning of its WhiteWave Foods organic division. Dean still maintains a stake in WhiteWave.


Now what: Full-year guidance was also below the mark, as the company now sees EPS of just $1.00 to $1.10 for 2013, below 2012's total of $1.39. Dean also sold its Morningstar division on Dec. 3 for net proceeds of $887 million, and while shareholders cheered the sale of WhiteWave and Morningstar, it now appears they need to adjust their expectations, as the company seems to be missing the growth from the organic division. With operating income declining at Dean's Fresh Dairy Direct segment, which now makes up the bulk of its sales, that earlier enthusiasm seems misplaced.

Find out what's next for Dean Foods. Add the company to your Watchlist by clicking right here.

The article Why Dean Foods Shares Got Dumped originally appeared on Fool.com.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool owns shares of Dean Foods. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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