It's easy to look at the headlines for Income Investor selection Sara Lee (NYSE:SLE) and come away with a negative outlook. But the truth is that the company's third-quarter earnings (released Tuesday morning) weren't that bad, and the shares actually trade right about where they did last week. So investors and speculators appear to have come to the conclusion that things haven't changed all that much, and that's not an unreasonable conclusion.

For about a year, there have been a number of moving parts at Sara Lee; the company has been divesting some of its businesses and focusing on more profitable growth from what it considers its core business. It looks like an odd strategy when you consider the amount of money spent acquiring some of these businesses, but that's the direction the company is going in. One can see the slim-down strategy at work in this quarter's report, as reflected in a number of gains and losses from business sales and transformations. The company is not yet done with its transformation -- still hoping to sell its branded apparel business in the Americas and Asia -- and has entered negotiations with Smithfield Foods (NYSE:SFD) for the sale of its European meats business.

All of these moving parts still don't add up to pretty financials. Looking at the business from a continuing operations perspective, sales were down 1.4%, earnings were down 9%, and diluted earnings per share were down $0.01 to $0.18 per share. The lone bright spot is that earnings from continuing operations and diluted earnings per share from continuing operations declined at a slower rate than they did in the first two quarters of the fiscal year.

On the balance sheet, the company's working capital accounts match the flatness in sales that has been seen so far this year, which isn't necessarily great, but at least the working capital health looks stable overall.

The other bright spot is that the company's free cash flow looks to be strong enough to support its dividend. The company did not provide a statement of cash flows in its earnings release, but it did file its 10-Q yesterday. While operating cash flows are down over 21% through the first nine months, the dividend is just barely covered. Some of the decline in operating cash flow is due to severance and other restructuring charges that should lessen in future periods as the company finishes realigning its business.

Of course, there is a little bit of concern as to whether or not those charges actually will wind down. Looking around the consumer foods and products industry, I see restructuring programs that are at various stages of completion at Unilever (NYSE:UL) (NYSE:UN), Kraft Foods (NYSE:KFT), and ConAgra Foods (NYSE:CAG). Unilever appears to be winding its restructuring down, and ConAgra has been stumbling for a few years, but new management may right the ship. That being said, it's not unheard of for one restructuring program to lead to another -- and with it another round of charges -- so investors thinking about taking the dive should pay careful attention to how Sara Lee progresses.

When there are so many moving parts and a business that isn't a fast grower to begin with, there is likely to be confusion, disinterest, and even frustration on the part of those analyzing the company. I'll confess that I've fallen into the disinterested bucket for the last year or so. However, this company does yield 4.3%, and the earnings declines seem to be slowing and not accelerating. Those facts alone have me thinking it's time to give Sara Lee a second look and see if the company's turnaround might actually come to fruition.

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Nathan Parmelee owns shares in Unilever, but has no financial interest in any of the other companies mentioned. The Motley Fool has an ironclad disclosure policy.