Dean Foods Company's (NYSE:DF) Earnings Dropped -60.68%, How Did It Fare Against The Industry?

Measuring Dean Foods Company's (NYSE:DF) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess DF's recent performance announced on 31 December 2017 and weigh these figures against its long-term trend and industry movements. View our latest analysis for Dean Foods

Was DF's weak performance lately a part of a long-term decline?

I prefer to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend enables me to analyze different companies in a uniform manner using the latest information. For Dean Foods, its most recent bottom-line (trailing twelve month) is US$47.42M, which compared to the previous year's figure, has fallen by a substantial -60.68%. Since these values are fairly short-term, I have calculated an annualized five-year figure for Dean Foods's earnings, which stands at -US$180.26M This suggests that while earnings declined from the previous year, over time, Dean Foods's profits have been rising on average.

What's the driver of this growth? Let's take a look at if it is merely owing to an industry uplift, or if Dean Foods has experienced some company-specific growth. Over the past couple of years, Dean Foods increased bottom-line, while its top-line fell, by efficiently controlling its costs. This resulted in to a margin expansion and profitability over time. Looking at growth from a sector-level, the US food industry has been growing, albeit, at a unexciting single-digit rate of 9.60% in the prior year, and 6.53% over the past five years. This means any uplift the industry is deriving benefit from, Dean Foods has not been able to gain as much as its average peer.

What does this mean?

Though Dean Foods's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. You should continue to research Dean Foods to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for DF’s future growth? Take a look at our free research report of analyst consensus for DF’s outlook.
2. Financial Health: Is DF’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.