As the self-designated beat reporter for everything bananas, I was enjoying the song in the air -- "I'm Chiquita banana and I've come to say... " -- as the latest banana boat arrived in port. Ah, but then the webcast started playing over the loudspeaker.
The mood on the docks was unsettled earlier Thursday when Chiquita Brands
The webcast started with good news. The highland sweet banana is producing tasty results in Asia. Market share for the company, which is among the U.S.'s top 25 retailers, rose from 29% in 2002 to 37% in the latest quarter.
Reporters covering the banana beat remember Wells Fargo
The webcast was decidedly non-growth. Callers questioned expansion and clearly wanted dividends -- even mentioning Motley Fool Hidden Gems recommendation Fresh Del Monte Produce
Don't they realize a new sweet pineapple resurrected Fresh Del Monte's fortunes? Chiquita is investing in banana research, trying to improve margins by finding new products. The highland banana is one example. Another might be a disease-resistant variety that could be grown organically and sold at a premium to natural food vendors such as Whole Foods Market
Another market reality is that supermarket companies such as Alberstons
Chiquita has only 40 million shares outstanding and annual sales of $3 billion. Small margin improvements on such a large sales base would produce dramatic results. The sole analyst who follows the company is looking for $2.55 a share in earnings in 2005. Said another way, if the company gets it right and starts improving margins, investors buying the stock now will be paying a paltry 6.6 times earnings.
Some may have called for change on the webcast. But this banana beat reporter sees better long-term returns with the company's current path.
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Fool contributor W.D. Crotty owns stock in Wells Fargo but none of the other companies mentioned.