Fresh produce company Dole (NYSE: DOLE) announced better-than-expected revenue in Q4 CY2024, with sales up 4.6% year on year to $2.17 billion. Its non-GAAP profit of $0.16 per share was significantly above analysts’ consensus estimates.
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Dole (DOLE) Q4 CY2024 Highlights:
- Revenue: $2.17 billion vs analyst estimates of $2.03 billion (4.6% year-on-year growth, 6.9% beat)
- Adjusted EPS: $0.16 vs analyst estimates of $0.08 (significant beat)
- Adjusted EBITDA: $74.61 million vs analyst estimates of $63.35 million (3.4% margin, 17.8% beat)
- EBITDA guidance for the upcoming financial year 2025 is $375 million at the midpoint, below analyst estimates of $389.8 million
- Operating Margin: 1.6%, in line with the same quarter last year
- Free Cash Flow Margin: 6%, similar to the same quarter last year
- Market Capitalization: $1.33 billion
Company Overview
Known for its delicious pineapples and Hawaiian roots, Dole (NYSE: DOLE) is a global agricultural company specializing in fresh fruits and vegetables.
Perishable Food
The perishable food industry is diverse, encompassing large-scale producers and distributors to specialty and artisanal brands. These companies sell produce, dairy products, meats, and baked goods and have become integral to serving modern American consumers who prioritize freshness, quality, and nutritional value. Investing in perishable food stocks presents both opportunities and challenges. While the perishable nature of products can introduce risks related to supply chain management and shelf life, it also creates a constant demand driven by the necessity for fresh food. Companies that can efficiently manage inventory, distribution, and quality control are well-positioned to thrive in this competitive market. Navigating the perishable food industry requires adherence to strict food safety standards, regulations, and labeling requirements.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for years.
With $8.48 billion in revenue over the past 12 months, Dole is one of the larger consumer staples companies and benefits from a well-known brand that influences consumer purchasing decisions. However, its scale is a double-edged sword because there are only so many big store chains to sell into, making it harder to find incremental growth. To accelerate sales, Dole must lean into newer products.
As you can see below, Dole struggled to generate demand over the last three years. Its sales dropped by 3% annually, showing demand was weak. This is a rough starting point for our analysis.
This quarter, Dole reported modest year-on-year revenue growth of 4.6% but beat Wall Street’s estimates by 6.9%.
Looking ahead, sell-side analysts expect revenue to decline by 1.5% over the next 12 months. While this projection is better than its three-year trend, it's hard to get excited about a company that is struggling with demand.
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Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Dole has shown weak cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 2.4%, subpar for a consumer staples business.
Taking a step back, we can see that Dole failed to improve its margin over the last year. Its unexciting margin and trend likely have shareholders hoping for a change.
Dole’s free cash flow clocked in at $130.8 million in Q4, equivalent to a 6% margin. This cash profitability was in line with the comparable period last year and above its two-year average.
Key Takeaways from Dole’s Q4 Results
We were impressed that Dole handily beat analysts’ revenue, EBITDA, and EPS expectations this quarter. On the other hand, its full-year EBITDA guidance missed. Zooming out, we think this was a mixed quarter. The stock traded up 2.4% to $14.39 immediately after reporting.
Indeed, Dole had a rock-solid quarterly earnings result, but is this stock a good investment here? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
