Much as we prefer to see clearly defined good news/bad news stories, the realities of business aren't always so simple. That holds true for cottonseed specialist Delta & PineLand
On their own, results this quarter were about as appealing as a handful of boll weevils. Sales were down 4% from last year, gross margins fell, and operating income dropped by 24% on higher expenses.
On the other hand, it's important to layer in some context for those results. The company experienced a shift in orders from this quarter to the next. What's more, management has revised its estimate for cotton plantings to "up 3%" from "flat." So if those delayed orders come through in the next quarter and these planting projections hold up, that should all be good news.
Of course, the pressures of competition can't entirely be ignored. Delta & Pine Land has good share in key growing regions like Texas, but don't dismiss the possible threats from a private-label offering from UAP Holding
I liked this stock back in early January, when I thought the markets were overreacting to bad news from what I believe to be an inconsequential quarter. Since then, though, the stock has had quite a nice run. I'm not really bearish on Delta -- I just think the easy money has been made. If you already own shares, I think you can still do OK, but I'm looking more at Monsanto, Syngenta, and UAP these days.
See what other seeds of wisdom we've planted in past Foolish takes:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).