Is Chiquita Brands International, Inc. (CQB) Destined for Greatness?

Going forward, Chiquita is trying to achieve annual cost savings of at least $60 million, an effort that will include job cuts and reduction or elimination of non-core divisions, and which has already resulted in the replacement of its CEO. By the start of 2015, Chiquita expects to achieve about 4% net margins in bananas, and 7%-8% net margins in salads. A rebound in banana futures (yes, that’s actually a thing) will also help, but even after a year of price declines, banana prices aren’t in a much different place than they were three years ago:

Central and South America Banana Price (US Import) data by YCharts

New rules set out by the U.S. Food and Drug Administration could impact smaller niche food processors and farmers like Chiquita. All publicly traded companies will have to fulfill certain requirements for “product safety” and “preventive controls” within their facilities, which will add an extra cost of compliance, crimping already razor-thin margins. Even if there’s money in the banana stand before taxes and regulations, there might not be once Uncle Sam takes his cut.

Putting the pieces together

Today, Chiquita has few of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy — or to stay away from a stock that’s going nowhere.

The article Is Chiquita Destined for Greatness? originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes and The Motley Fool have no position in any of the stocks mentioned.

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