Dean Foods (DF) Is Strong On High Volume Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Dean Foods ( DF) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Dean Foods as such a stock due to the following factors:

  • DF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $31.9 million.
  • DF has traded 464,096 shares today.
  • DF is trading at 4.80 times the normal volume for the stock at this time of day.
  • DF is trading at a new high 3.00% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on DF:

Dean Foods Company, a food and beverage company, processes and distributes milk, and other dairy and dairy case products in the United States. The stock currently has a dividend yield of 1.7%. Currently there are 3 analysts that rate Dean Foods a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Dean Foods has been 1.6 million shares per day over the past 30 days. Dean has a market cap of $1.5 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.38 and a short float of 7.8% with 3.38 days to cover. Shares are down 16% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Dean Foods as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and generally higher debt management risk.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.3%. Since the same quarter one year prior, revenues slightly increased by 4.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 114.0% when compared to the same quarter one year prior, rising from -$37.68 million to $5.28 million.
  • DEAN FOODS CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DEAN FOODS CO swung to a loss, reporting -$0.21 versus $3.39 in the prior year. This year, the market expects an improvement in earnings ($0.76 versus -$0.21).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Food Products industry and the overall market, DEAN FOODS CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for DEAN FOODS CO is rather low; currently it is at 20.14%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.22% trails that of the industry average.

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