If you want the best veggies at the market, you have to wake up bright and early and get there before the bins have been picked over. Likewise, if you want the freshest news on fruit grower Fresh Del Monte (NYSE:FDP), you'll want to see the company's earnings release tomorrow morning.

What analysts say:

  • Buy, sell, or waffle? Five analysts follow Fresh Del Monte. Three of them rate it a hold and two a sell.
  • Revenues. Sales are estimated to have grown less than 1% this quarter, to $842.4 million.
  • Earnings. Profits are believed to have fallen 44% to $0.58 per share.

What management says:
I'm beginning to dread the word "challenging" when it pops up in an earnings release. In February, a derivation of the dread word featured prominently in CEO Mohammad Abu-Ghazaleh's explanation of his company's disappointing fourth quarter (when sales dropped 7% and profits evaporated). Abu-Ghazaleh cited "external challenges" such as "higher costs of fuel, transportation and fruit production" as contributing to the company's fourth-quarter loss. The company was also hit with weakness in banana pricing, greater competition in Asia, and "lower-than-expected" sales of its trademark gold pineapples in Europe and North America.

What management does:
These challenges are reflected in the company's margin trends. Over the last four quarters, gross margins have slipped 40 basis points, while the higher operating costs cited by Abu-Ghazaleh took even greater tolls on operating and gross margins.

Margins

9/04

12/04

4/05

7/05

9/05

12/05

Gross

9.2%

9.1%

10%

10%

10.2%

9.6%

Op.

5.1%

4.6%

5.2%

4.5%

4.4%

3.6%

Net

5.4%

4.8%

5.0%

4.3%

3.9%

3.3%


All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
There does, however, shine a light of hope for the company, and it's in a place you might not expect. According to a Wall Street Journal article last week, several fruit sellers were quoted as saying that Europe's switch from quotas to punitive tariffs on banana shipments from Latin America was not hurting sales as much as had been feared.

When Fresh Del Monte reports its Q1 results tomorrow, while we'll certainly be interested in the numbers themselves, Fools should perhaps be even more interested in hearing what the company has to say about how things are shaping up in Europe.

Competitors

Customers

Chiquita (NYSE:CQB)

Wal-Mart (NYSE:WMT)

Del Monte Foods (NYSE:DLM)

Maui Land & Pineapple (AMEX:MLP)


Fresh Del Monte is a Motley Fool Hidden Gems selection. Small stocks can grow into big winners -- see how with a free trial to Tom Gardner's newsletter.

Fool contributor Rich Smith does not own shares of any company named above.