Dole Food Earnings Preview: EPS Expected to Be Up 25%

Dole Food DOLE is scheduled to report its second-quarter 2011 results Thursday, July 28, after the closing bell. The world's largest producer of fresh fruit and vegetables posted strong first-quarter results due in part to higher prices and improved market conditions in Europe and Asia. And Dole Food said in an 8-K filing in June that positive momentum continued in the second quarter, which should please investors. Analysts are looking for the company to report earnings of $0.66 per share, which is up from $0.49 in the same period of last year. But that estimate is down from $0.69 per share 60 days ago. The analysts' forecast also calls for the company to post revenues of $1.8 billion, an increase of 4.5% from a year ago. Dole Food's track record on earnings has been mixed recently: falling short of consensus estimates in two of the past four quarters. First quarter EPS were more than double expectations, though. Looking ahead to the full year, analysts so far are looking for per-share earnings to be up 71.1% year-over-year and revenues that are 3.8% higher. The Company Dole Food Company operates in three segments. The Fresh Fruit segment sells bananas, pineapples and other fruits primarily in North America, Europe, and Asia. The Fresh Vegetables segment produces and market various fresh and fresh-cut vegetables. The Packaged Foods segment produces and markets canned fruit, fruit juice, snack foods and frozen fruits. Principal customers include mass merchandisers and supermarkets. The company was founded in 1851. During the three months that ended in June, the company announced that it intends to refinance its existing senior secured credit facilities in order to provide enhanced operating flexibility. Performance The company has a long-term earnings per share growth forecast of 9.7%. Its forward P/E ratio estimate is less than the trailing P/E ratio, which is lower than the industry average. The PEG ratio is 0.9. The consensus recommendation is to buy the stock; two of five analysts rate it a Strong Buy. Their mean price target (where analysts expect the share price to go) is $15.83 per share. The share price ended Tuesday at $13.78, which is 24.5% higher than a year ago. However, the stock has traded mostly between $13 and $15 since the beginning of the year. It is now above both the 50-day and 200-day moving average. Shares have outperformed competitors Chiquita Brands CQB and Fresh Del Monte Produce FDP in the past six months, but they have underperformed the broader markets during that time. Action Items: Bullish: Traders interested in exchange traded funds invested in Dole Food might want to consider the following trades:

• PowerShares Dynamic Food & Beverage Portfolio PBJ: up 26.1% in the past year
• Vanguard Small-Cap Index Fund VB: up 26.4% in the past year
• iShares Russell 2000 Index Fund IWM: up 24.5% in the past year

Bearish: Traders looking for contrarian option might want to consider these positions:

• ProShares UltraShort Russell2000 Growth SKK: up 150.1% year to date
• ProShares UltraShort SmallCap600 SDD: up 122.3% year to date
• Direxion Daily Small Cap Bear 3X Shares TZA: up 119.1% year to date

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