Foolish Forecast: Wimm-Bill-Dann Delivers

After the 20%-plus shellacking that Russia's stock market has endured over the past month, Russian investors could sure use some good news right about now. Tomorrow, milkman Wimm-Bill-Dann (NYSE:WBD) will ring the doorbell and, with any luck, deliver a few bottles full of fresh Q1 2006 profits growth.

What analysts say:

• Buy, sell, or waffle? Seven analysts follow Wimm. One each rates it a buy and a sell, and the other five say just hold on tight as the stock falls along with everyone else.
• Revenues and earnings. The analysts haven't put a number to tomorrow's profits estimates, but they are willing to guess at sales. The consensus is that Wimm will report an 18% increase to $382.6 million.

What management says:
Wimm's biggest news of the quarter is already out of the bag. In last quarter's earnings release, the company announced that it had poached a top executive from its co-archrival, Coca-Cola (NYSE:KO). Specifically, Coca-Cola Hellenic Bottling Company (NYSE:CCH) Regional Managing Director Tony Maher, would become Wimm's own new CEO. For those following the ins and outs of the Russian fruit juice market (and really, who doesn't?), Maher will be a familiar name, as he orchestrated Coke's buyout of one of the other two major juice players in Russia, Multon.

What management does:
How does a firm grow its profits? First, by growing revenues. If the analysts cited above know their business, Wimm has that one down pat. But second, the firm also wants to expand its profit margins, and eke out more kopeks from each additional ruble landing atop the growing pile of revenues. Wimm's got a good track record in that department as well, with its rolling gross, operating, and net margins all higher today than they were 18 months ago.

One Fool says:
By all accounts, Wimm today is a stronger company than it was two months ago. The firm is generating real cash profits, as well as net earnings of the accounting variety. It continues to expand its business into the Russian provinces in pursuit of the expanding middle class. And perhaps best of all, it has poached a major rival's executive to run its own business. But all of that is yester-quarter's news, and Wimm will be hard pressed to match such a series of stellar accomplishments tomorrow.

Meanwhile, the firm still faces two strong rivals in the form of Coke and Lebedyansky (for juice), and a weaker rival in Danone (for dairy). In tomorrow's news, we still need to watch for expanding margins, a sign that Wimm is competing effectively against its rivals. If they do expand, Wimm's size may be helping it to achieve economies of scale in production, and wield pricing power among Russian consumers. If they contract, this could tell us that the company is having to compete on price to maintain or recapture market share.

Competitor:

• Pepsico (NYSE:PEP)

Customer:

• McDonald's (NYSE:MCD)

Creditor:

• UBS (NYSE:UBS)

Coca-Cola is an Inside Value recommendation.

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