Diamond Foods, Inc. (NASDAQ:DMND) has not been kind to its shareholders over the past two years. The company's shares have collapsed since hitting a high of over $90 in September 2011. An accounting scandal cancelled the planned merger between Diamond Foods Inc. (NASDAQ:DMND) and the Pringles division of The Procter & Gamble Company (NYSE:PG) when the company was forced to restate earnings results. However, Diamond Foods Inc. (NASDAQ:DMND) just hired a new CFO, and shareholders are starting to feel some hope that the company can turnaround.
Buy what you know
Owning shares in Diamond Foods Inc. (NASDAQ:DMND) should be as simple as buying what you know. After all, the company's products are on every grocery store shelf. The company's brands include Kettle Brand chips, Emerald snack nuts, Pop Secret popcorn, and Diamond Foods Inc. (NASDAQ:DMND) of California nuts. As recently as 2009, Diamond Foods Inc. (NASDAQ:DMND) had 10% of the snack food market.
Instead, it turns out the company's CEO and CFO had booked payments to walnut growers in the wrong periods. Diamond Foods was forced to restate earnings, and both the CEO and CFO were fired. Since February 2012, the company has been working to clean up the mess they left and instill some stability into the company and for shareholders.
Next steps for the company
The company is finally bringing in a permanent CFO. Raymond Silcock will be the new CFO, and he brings a wealth of experience in the food and beverage industry. He was previously CFO of Great Atlantic & Pacific Tea, and before that he was CFO at UST and started his career in finance at Campbell Soup.
The market has reacted positively to the news, with the stock rising over 11% on the announcement. With Brian Driscoll as the new CEO, the two can work to reduce costs and increase brand awareness. The company is no longer in crisis mode, but rather in turnaround mode.
There are some signs that the turnaround is starting to happen. In this week's earnings release, analysts were forecasting a loss of $0.17 per share on revenues of $175.1 million. Instead, Diamond beat expectations by earning $0.05 per share on revenues of $184.9 million.
Pringle's ends up with Kellogg Company (NYSE:K)
When the deal for Pringles fell apart with Diamond Foods, The Procter & Gamble Company (NYSE:PG) struck a deal with Kellogg Company (NYSE:K). As a result of the Pringle's deal, Kellogg Company (NYSE:K) is now the number two snack food company in the industry. While Kellogg has benefitted by owning Pringle's, The Procter & Gamble Company (NYSE:PG) has had to restructure its organization as well.