Del Monte Corp (DMC) stock analysis

P/E above its 5-year median

Del Monte's P/E of 16.2 is above its own 5-year median of 15.6.

P/E below the industry

Del Monte's P/E of 16.2 is below the Consumer staples median of 23.3.

EV/EBITDA above its 5-year median

Del Monte's EV/EBITDA of 8.9 is above its 5-year median of 8.9.

P/B below the industry

Del Monte's price-to-book of 0.65 is below the Consumer staples median of 2.48.

Trading below fair value

The share price of $27.71 is below our fair value estimate of $39.56.

Margin of safety over 20%

The price is 30.0% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew -0.9% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -3.0% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 2.8% over the last twelve months, against a 5-year average of 13.0% a year.

Growing slower than the industry

Revenue grew 1.4% over the last twelve months; the Consumer staples median is 1.6%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin improving

Gross margin was 9.6% over the last twelve months, against 8.4% a year earlier.

Return on equity under 15%

Return on equity was 4.0% over the last twelve months and averaged 4.2% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 4.0%, below the 10% that usually covers the cost of capital.

Return on equity above the industry

Del Monte's return on equity of 4.0% is above the Consumer staples median of 0.9%.

Earnings grew over 5 years

Net income grew 13.0% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 1.9% over the last twelve months, against a 5-year average of 1.9%.

Net margin above the industry

Del Monte's net margin of 1.9% is above the Consumer staples median of -6.7%.

Low debt

Debt is 24.8% of shareholders' equity, under the 40% we consider low.

Debt falling against equity

Debt to equity fell from 31.4% five years ago to 24.8%.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 12.8% of total debt; we look for at least 20%.

Interest well covered

Operating income covers interest expense 7.5 times.

Short-term assets cover short-term debts

Current assets are 2.30 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.79; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Del Monte paid dividends worth 4.3% of the share price over the last twelve months.

Yield below Treasuries

The 4.3% yield is below the 4.4% on a 1-year Treasury.

Yield in the top quarter

The top quarter of US dividend payers yield 3.8% or more; Del Monte yields 4.3%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 10 fiscal years.

Covered by earnings

Dividends take 69.8% of net income.

Cash-flow cover

Needs dividends paid and free cash flow.