Why Diamond Foods Shares Dropped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of snack specialist Diamond Foods sank more than 12% today after its current-quarter outlook disappointed Wall Street.
So what: While Diamond's fourth-quarter results came in ahead of expectations -- adjusted EPS of $0.09 versus the break-even consensus -- a rather downbeat guidance for the current quarter is reigniting concerns over its profitability going forward. Diamond shares had been rallying nicely in 2013 on signs that the company was steadily getting over its 2011 accounting issues, but today's news suggests that management still has a long way to go.
Now what: Management expects the first quarter to be pressured by costs associated with the relaunch of Emerald Nuts, as well as a lower walnut supply. "Despite expected increases in tree nut costs, fiscal 2014 is expected to be a year of earnings improvement as additional benefits from the execution of the multiyear turnaround strategy are realized," the company reassured investors in a statement. Of course, with the stock still up about 90% from its 52-week lows and trading at a 20-plus P/E, I'd wait for an even wider margin of safety before buying into that bull talk.
A more reliable way to build wealth
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.
The article Why Diamond Foods Shares Dropped originally appeared on Fool.com.Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.