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What: Shares of Fresh Del Monte Produce Inc. (NYSE:FDP) were looking tasty today, gaining as much as 13% after a blowout first-quarter earnings report.
So what: The supplier of fresh-cut fruits and vegetables delivered a profit of $1.04 per share, much better than expectations of a $0.66 per-share profit, as revenue improved 6.9% to $982.3 million, beating estimates at $946.5 million. Management credited the quarter's success to holding costs in line, higher profitability in its offshore melon business, and growth in the Middle East. Revenue and gross profit were up in all of the company's business segments thanks to higher prices on some produce items and favorable exchange rates.
Now what: Management did not provide guidance, but the company's steps to expand its global market position and enhance its product mix appear to be taking hold. Banana sales contributed nearly half of Fresh Del Monte sales in the quarter, rising 7.6%, but the company may face increased competition from the merger of Chiquita Brands and Fyffes, announced last month. Keep an eye on banana sales and prices over the rest of the year. If Fresh Del Monte can maintain the growth rate we saw in its first quarter, that should bode well for the company as a whole.
Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.