Shareholders at Dole Food Co. have been slicing and dicing the company’s financial numbers, stirring up a bit of optimism in the process. The Westlake Village company’s stock closed at $11.53 on Dec. 5, up 5.4 percent during the previous two weeks. (See StockWatch page 42.) Dole is holding a pot of cash since it sold its packaged and Asian fresh food divisions in September. Tokyo-based Itochu Corp. paid $1.7 billion to Dole in the transaction. Dole could pay down its $1.5 billion debt, but alternatively it could pass the money onto shareholders via a special dividend, or it could repurchase shares. Jonathan Feeney, an analyst at Janney Capital Markets in Philadelphia, believes a special dividend could add $3 to Dole stock price, while a repurchase program could add $4.80. Still, Jason English, vice president of equity research at New York’s Goldman Sachs Group Inc., thinks investors are nervous and waiting to see what Dole does with its windfall from the asset sale. “Dole has yet to detail its capital allocation strategy and we believe lack of visibility on the capital structure is likely to remain a source of equity investor uncertainty,” he wrote in a note to investors on Nov. 16. The fundamentals of Dole’s business remain solid, even though the most recent quarterly filings fell far short of analyst expectations. The company reported a third-quarter net loss of $5.3 million or 6 cents per share, compared to a consensus estimate for positive net income of 14 cents per share. Feeney blamed the shortfall on the fresh fruit product group, which reported a 10 percent decline in sales mostly due to the divestiture of the Asian operations. All other segments of the business performed according to expectations. Harry Balzer, vice president at market research firm NPD Group Inc. in Port Washington, N.Y., said consumer demand in the U.S. continues to be high for both packaged and fresh food items, Dole’s main product lines. “There will never be a recession on eating in this country,” he said. “Fruits and vegetables, it always amazes me how much of those we consume in this country.” While the loss of its Asian operations will decrease Dole’s revenues in the future, the company said in a statement the divestiture will help the company concentrate on its business in North America, Latin America and Europe. “We are realizing a premium valuation for our worldwide packaged foods and Asia fresh produce businesses and will retain a strong fresh produce business that has increased financial flexibility to grow,” Chief Executive David DeLorenzo said in a statement.
Dole Investors Hunger for Returns After Big Sale
