Turnaround at Dean Foods Gathering Steam (DF)

Dean Foods Company (NYSE: DF) may finally be realizing the benefits from a turnaround.  The company beat earnings and gave solid guidance.  The loss of -$0.05 EPS on the headline was actually $0.27 EPS outside of items versus estimates of $0.23 EPS.  Sales also rose by almost 5% to $3.3 billion and that was against estimates of about $3.34 billion.

Other good developments are coming to Dean Foods.  The company remains concerned about soft dairy volume and excess capacity as well as the health of the dairy sector.  Still, it also is more optimistic regarding its cost structure coming more in-line with the sector and it feels much better positioned in a challenging environment compared to prior periods.  The company even feels better regarding the economic outlook in 2012 with the expectation of a $230 million debt pay down and another $100 million in cost savings.

While Dean Foods is up over 10% at $12.02 today, and while the 52-week trading range is $7.83 to $13.90, shares remain well under the lows seen around the recession’s worst point and this was a $20 stock briefly in mid-2009. This was a $35.00 stock in 2007.

JON C. OGG