WWAV is still trying to bottom and has been finding support around $40 for two months. See chart above. While the 50-day moving average is still pointed down, we can see a clear bullish divergence between the price action making equal lows at $40 and the improving momentum study making higher lows. Technical analysis is not infallible, so have a plan to exit WWAV if it breaks support (exchanges are eliminating stop orders).
TheStreet Ratings team rates WHITEWAVE FOODS CO as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate WHITEWAVE FOODS CO (WWAV) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and good cash flow from operations. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.2%. Since the same quarter one year prior, revenues rose by 17.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- WHITEWAVE FOODS CO has improved earnings per share by 21.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, WHITEWAVE FOODS CO increased its bottom line by earning $0.78 versus $0.56 in the prior year. This year, the market expects an improvement in earnings ($1.18 versus $0.78).
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Food Products industry average, but is greater than that of the S&P 500. The net income increased by 22.4% when compared to the same quarter one year prior, going from $40.86 million to $50.02 million.
- Currently the debt-to-equity ratio of 1.86 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, WWAV has a quick ratio of 0.56, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: WWAV