As part of Sara Lee's
Wednesday morning, Sara Lee released full-year results that included net sales improving a respectable 7.1%, with "particularly strong growth" in the international beverage and household and body care units, which both posted top-line growth in the low double digits. The only laggard was the foodservice segment, which competes with the likes of SYSCO
Diluted earnings came in at $0.68 for the year, which was down slightly from last year's reported figure. However, according to the company's calculations for continuing operations, earnings jumped to $0.57 from $0.04 last year. The difference is in things such as transformation costs, impairment charges, and quite a few other items as Sara Lee spun off Hanesbrands
Despite the more favorable way Sara Lee would like us to look at its bottom-line trends, in my mind it's still hard to tell what its real operating trends are or will be. Despite the overall profitability for the year, operating income fell nearly 50% for the year in the North American retail meats segment, while international beverages, which was touted for strong sales growth, posted an 18% drop in operating income.
Also, although Sara Lee expects fiscal 2008 earnings "from continuing operations" of $0.95 to $1.01, management expects this figure to include an $0.18 gain from a tobacco business that was sold in 1999. Based on the current stock price and excluding the gain, that puts the forward P/E at 20 to 21. That's a pretty lofty multiple, especially considering Sara Lee is giving guidance for at least a 10% fall in operating cash flow for the year.
Sara Lee may be experiencing some initial sales improvements from its turnaround plans, but archrivals such as Unilever
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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned. The Fool has an ironclad disclosure policy.