Zacks Analyst Interview Highlights: Hershey Foods, Dean Foods, Pepsi Bottling Group, Colgate-Palmolive and UST

Business Wire, Sept 24, 2007

CHICAGO -- Zacks.com releases the latest Analyst Interview. Today's interview is with senior analyst Steven Ralston, who discusses Hershey Foods (NYSE: HSY), Dean Foods (NYSE: DF), Pepsi Bottling Group (NYSE: PBG), Colgate-Palmolive (NYSE: CL) and UST (NYSE: UST).

A synopsis of today's Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.

Since consumer staples benefit from relatively steady demand, the sub-prime contagion probably doesn't affect your companies. However, there are other types of concerns affecting the industries that you follow, aren't there?

Yes, specifically rising commodity costs, which will actually be exacerbated with this cut in the rates by the Fed. These rising commodity costs are pressuring the margins of these companies in consumer non-durables, and managements institute productivity programs who offset this cost inflation. And in general, they are modestly successful - and in some companies actually overcome the effect of rising commodity costs.

On the negative side, the area where there has been the greatest cost inflation has been in dairy costs. And this is because of the crops being used for ethanol, which has caused a rise in the feed costs for cattle and dairy cows, and as a result the raw milk prices have increased. This has caused earnings disappointments in two of my companies: Hershey Foods (NYSE: HSY) and Dean Foods (NYSE: DF), which are heavily exposed to milk costs.

On the positive side, however, Pepsi Bottling Group (NYSE: PBG) had a positive surprise, as did Colgate-Palmolive (NYSE: CL) and UST (NYSE: UST). Pepsi Bottling had instituted a productivity program that overcame the increased commodity costs and had a positive earnings surprise. Colgate is a unit growth story - worldwide volume growth was about 8%, and that drove the positive surprise in that company. And in UST, this is the second quarter we've had a positive increase in the net can sales of the premium moist smokeless tobacco products, and I emphasize "premium" because that's where the fat margins are in UST, and that helped propel earnings.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=2679.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros by going to http://at.zacks.com/?id=2648.

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

(a)The Zacks Performance Rank performance is the total return of equal weighted simulated portfolios consisting of those stocks with the indicated Zacks Rank net of fees. Results reflect the reinvestment of dividends and other earnings. Simulated results do not represent actual trading and may not reflect the impact that economic and market factors might have had on decision-making if an adviser were actually managing a client's money.

(b)The S&P 500 Index ("S&P 500") is a well-known, unmanaged index of the prices of 500 large-company common stocks selected by Standard & Poor's. The S&P 500 includes the reinvestment of all dividends, no transaction costs, and represents the gross returns before management fees.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.