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Home | Getting Started | Personal Finance | Q & A | Sample Portfolio | Glossary | About Us |
| Date: Tuesday 02nd 2008f December 2008 03:55:39 PM |
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Del Monte Is Not Fresh - 11/26/2005 |
| By: Novice Investing Staff |
| Fresh Del Monte Produce Inc. (FDP) has been a laggard ever since we picked it off as our portfolio recommendation. What seems to be the problem? Earning plummets from $ 3.65 in 2003 to $ 2.30 in 2005. This is way off our prediction of $ 3.33 for 2005. Let us come clean and tell you that we made a mistake on this one. The terrible thing is we do not know why we are so far off. We cannot find a lot of useful financial data from the company except from their website. | |
| For 2006, the company is expected to earn $ 2.44 per share. Let us start fresh and figure out how much is the company worth at this point. As of December 31st of 2004, Del Monte has a negative net cash of $ 290.1 Million or $ 5.01 per share. | |
| Yahoo! Finance expects the company to grow by 9.0% per year. While this is possible, we will assume a 0 % growth rate for now. With a fair P/E value of 13.4, the fair value of Del Monte's business is therefore (13.4 x $ 2.44 ) = $ 32.70 per share. Adding in the net debt, the fair value of Del Monte stock is $ 27.69 per share. | |
| Currently, Del Monte is trading at $ 26.09, close to its fair value. A year ago, we bought the stock at $ 28.69 per share. Clearly this is a loss. We made a mistake on this one. We will sell Del Monte once it reaches fair value and move on. It is tough to sell at a loss but we have miscalculated Del Monte's earning potential. | |
| Dividend. We have held Fresh Del Monte since December 6th 2004. Last November, the company distribute the 4th quarterly dividend since we held them. Total dividend collected so far is (69 shares x $ 0.80 per share) = $ 55.20. We will add this dividend at our portfolio section and adjust our balance accordingly. Meanwhile, we will keep an eye on Del Monte and try to sell it as it reaches fair value of $ 27.69 per share. | |
| END | |
| For preliminary research, you can browse our collection of annual reports here | |
| You can also view other helpful commentary by clicking here |
| Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding Fresh Del Monte Produce Inc. (FDP) or any other securities. |
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