Milk -- it does a body good. But is it good for your portfolio? Tomorrow we'll get an update on that score, as Russia's dairy king, Wimm-Bill-Dann (NYSE:WBD), reports its Q4 and full-year 2005 results.
What analysts say:
- Buy, Sell, or Waffle? Five analysts follow Wimm -- and apparently something's curdled, because they're holding their noses. Three rate the stock a hold; the other two say sell.
- Revenues. Analysts are predicting a 35% rise in profits for the year, to $1.61 billion. However, Wimm has booked only $1.02 billion year-to-date. To hit the analysts' mark, Wimm will therefore need to report $584 million in Q4 sales, an 82% increase over last year's fourth quarter.
- Earnings. The analysts' predictions look even more strained on the earnings front. The projected 52% rise in full-year 2005 profits (to $1.22 per share) may be hard to meet; Wimm has booked only $0.49 so far this year. Considering that the company earned only $0.10 in Q4 2004, expecting to see $0.73 for Q4 2005 seems a bit optimistic.
What management says:
On the projections front, it's important to note that management is not egging analysts on toward the big numbers noted above. Reviewing past SEC filings, Wimm provided no earnings guidance whatsoever for either Q4 last quarter, or fiscal 2005, one year ago.
As for what the company has said, Wimm's biggest news came early last month, when CEO Sergei Plastinin announced he will be soon moving on to create a new company. Shareholders may or may not have been reassured to hear his statement: "Despite the fact that I have taken this decision, I intend to remain a shareholder of [Wimm] . I will not leave my post until [a successor] is found."
What management does:
So is Plastinin abandoning a sinking ship? Let's take a look at how his company is performing:
|
Margins % |
6/04 |
9/04 |
12/04 |
3/05 |
6/05 |
9/05 |
|---|---|---|---|---|---|---|
|
Gross |
27.8 |
27.7 |
27.5 |
27.4 |
27.5 |
27.4 |
|
Op. |
4.5 |
4.7 |
4.4 |
4.4 |
4.2 |
4.9 |
|
Net |
1.6 |
1.7 |
1.9 |
1.7 |
1.4 |
1.9 |
One Fool says:
Wimm's gross margins continue to be squeezed by the high price of raw milk -- a theme highlighted in almost every quarterly report. But that's not keeping Wimm from milking the benefits of scale. By streamlining its operations and controlling costs, Wimm has raised its operating and net margins significantly, and the company is now 19% more profitable than it was 18 months ago, gross margin erosion notwithstanding.
Competitors:
- Coca-Cola (NYSE:KO)
- Danone (NYSE:DA)
Fool contributor Rich Smith does not own shares of any company named above.
