Here It Comes….Margin Collapse (Dean Foods)


If you’re still on the “rally forever to the moon” bandwagon, here’s the latest warning for you….

The problem? 

Margins being compressed by outrageously-ramping input costs.

Dean joins Kimberly-Clark and Kraft that have reported this problem in the last couple of weeks. 

This is going to get worse.  Much worse.

The market will eventually come off its heroin high from the “Bernanke PUT” crap and realize that it was not a PUT that was stuck under the market, it was sold and the shares were PUT to you – that is, you’re now the bagholder!

Two more questions for you:

Do you like this soybean chart?  Does that spell “ramping input costs” to you?

How about this silver chart?  You know, one of the components in electronics?  Yeah…

While in the last month we’ve had Samsung and others predict a price war in televisions this holiday season in an attempt to prevent a demand collapse.

That ought to be good for margins too…..

Collapsing margins ultimately collapse multiples and stock prices.


Discussion (registration required to post)