Billionaire Ken Griffin Tries WhiteWave’s Soy Milk

Dean, as a dairy focused company, is in fact one of WhiteWave’s closest peers. The forward P/E there is only 14, though as we’ve noted it provides more generic dairy products and so we’d expect lower margins and less growth. Still, with the lower valuation it may be worth considering and of course its management should also be able to better focus on core operations with WhiteWave’s products out of the company.

We can also compare WhiteWave to other food companies including General Mills, Inc. (NYSE:GIS), Mead Johnson Nutrition CO (NYSE:MJN), and Mondelez International Inc (NASDAQ:MDLZ).  Mead Johnson, which provides infant formula and children’s nutrition products, was the most popular food stock among hedge funds during the third quarter; General Mills made the top ten list as well (see the rest of the most popular food stocks). Mead Johnson’s revenue and earnings were slightly down last quarter versus a year earlier, however, and its trailing P/E is 24. As a result we don’t think that it’s a good buy at all. General Mills has multiples in the teens, and while we wouldn’t expect much growth at the company it stands out as extremely defensive: the stock’s beta is 0.0 and the dividend yield, at current prices, is 3.2%. Revenue was in fact up 5% in the third quarter compared to the same period in 2011 (net income was up strongly, but that was likely anomalous) and it might be worth considering as a value stock. Mondelez carries a forward P/E of 16; it too is spinout related as it changed its name from Kraft to Mondelez following the spinout of Kraft Foods Group Inc (NASDAQ:KRFT).

WhiteWave doesn’t look like a good buy right now. It’s possible that the company will look interesting following a quarter or two as a separate company, but at the moment is seems that the market is too confident in continued high earnings growth.

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WhiteWave’s CEO buying shares in Dean Foods