Is Dole Food Company, Inc. (DOLE)’s Offer Cheap?

Fresh Del Monte Produce Inc (NYSE:FDP) is trading at nearly $27 per share, with a total market cap of around $1.55 billion. The market values Fresh Del Monte at only 7.8 times its forward EBITDA. It focuses on the fresh-cut produce business in many regions around the world, including the Middle East, Europe and Africa. In the first quarter 2013, Fresh Del Monte experienced a 2.33% growth in revenue to $919 million. EPS came in at only $0.71, lower than the EPS of $1.08 in the first quarter last year. The lower earnings in the first quarter this year was due to a much higher cost of goods sold and higher provision for income taxes. Nevertheless, I personally think that the healthy eating habits will make consumers buy more fresh fruit products, affecting the company positively in the near future. In the beginning of May 2013, the company approved a 3 year share buyback plan for a total of around $150 million.

My Foolish take

Dole Food Company, Inc. (NYSE:DOLE)’s market price has moved up above the offering price of its Chairman and CEO David Murdock, indicating the fact that market might consider the offer to be undervalued. As both of its peers, Fresh Del Monte and Chiquita Brands are valued at a much lower valuation, they could be considered quite relatively undervalued and could be seen as good investment opportunities for long-term investors.

Anh HOANG has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Is Dole Food’s Offer Cheap? originally appeared on Fool.com and is written by Anh HOANG.

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