Dole (DOLE)

Fresh produce company Dole (NYSE:DOLE) reported Q1 CY2025 results beating Wall Street’s revenue expectations, but sales fell by 1% year on year to $2.10 billion. Its non-GAAP profit of $0.35 per share was 10.7% below analysts’ consensus estimates.

Company Overview

Known for its delicious pineapples and Hawaiian roots, Dole (NYSE:DOLE) is a global agricultural company specializing in fresh fruits and vegetables.

The perishable food industry is diverse, encompassing large-scale producers and distributors to specialty and artisanal brands. These companies sell produce, dairy products, meats, and baked goods and have become integral to serving modern American consumers who prioritize freshness, quality, and nutritional value. Investing in perishable food stocks presents both opportunities and challenges. While the perishable nature of products can introduce risks related to supply chain management and shelf life, it also creates a constant demand driven by the necessity for fresh food. Companies that can efficiently manage inventory, distribution, and quality control are well-positioned to thrive in this competitive market. Navigating the perishable food industry requires adherence to strict food safety standards, regulations, and labeling requirements.

Competitors in the fresh produce category include Calavo Growers (NASDAQ:CVGW), Fresh Del Monte (NYSE:FDP), and Mission Produce (NASDAQ:AVO) along with private companies Chiquita Brands International and Sunkist Growers.

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $8.45 billion in revenue over the past 12 months, Dole is one of the larger consumer staples companies and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s harder to find incremental growth when your existing brands have penetrated most of the market. To expand meaningfully, Dole likely needs to tweak its prices, innovate with new products, or enter new markets.

As you can see below, Dole’s demand was weak over the last three years. Its sales fell by 2% annually, a tough starting point for our analysis.

This quarter, Dole’s revenue fell by 1% year on year to $2.10 billion but beat Wall Street’s estimates by 2.4%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection indicates its newer products will catalyze better top-line performance, it is still below average for the sector.

Dole has bad unit economics for a consumer staples company, signaling it operates in a competitive market and lacks pricing power because its products can be substituted. As you can see below, it averaged a 8.4% gross margin over the last two years. Said differently, for every $100 in revenue, a chunky $91.59 went towards paying for raw materials, production of goods, transportation, and distribution.

This quarter, Dole’s gross profit margin was 8.7%, in line with the same quarter last year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Dole was profitable over the last two years but held back by its large cost base. Its average operating margin of 2.8% was weak for a consumer staples business. This result isn’t too surprising given its low gross margin as a starting point.

Analyzing the trend in its profitability, Dole’s operating margin might fluctuated slightly but has generally stayed the same over the last year, meaning it will take a fundamental shift in the business model to change.

This quarter, Dole generated an operating profit margin of 3.2%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

We track the change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Dole’s flat EPS over the last three years was weak but better than its 2% annualized revenue declines. However, we take this with a grain of salt because its operating margin didn’t expand and it didn’t repurchase its shares, meaning the delta came from reduced interest expenses or taxes.

In Q1, Dole reported EPS at $0.35, down from $0.43 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Dole’s full-year EPS of $1.19 to grow 15.7%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Dole has shown weak cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 1.6%, subpar for a consumer staples business.

Taking a step back, we can see that Dole failed to improve its margin over the last year. Its unexciting margin and trend likely have shareholders hoping for a change.

Dole burned through $131.6 million of cash in Q1, equivalent to a negative 6.3% margin. The company’s cash burn increased from $53.19 million of lost cash in the same quarter last year. These numbers deviate from its longer-term margin, indicating it is a seasonal business that must build up inventory during certain quarters.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Dole historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 7.1%, somewhat low compared to the best consumer staples companies that consistently pump out 20%+.

Dole reported $261 million of cash and $978.7 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $350.7 million of EBITDA over the last 12 months, we view Dole’s 2.0× net-debt-to-EBITDA ratio as safe. We also see its $32.51 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was encouraging to see Dole beat analysts’ revenue expectations this quarter. We were also happy its EBITDA outperformed Wall Street’s estimates. On the other hand, its EPS missed significantly and its full-year EBITDA guidance fell slightly short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 4% to $14.14 immediately after reporting.

Updated: June 12, 2025 at 10:40 PM EDT

Before making an investment decision, investors should account for Dole’s business fundamentals and valuation in addition to what happened in the latest quarter.

Dole doesn’t pass our quality test. First off, its revenue has declined over the last three years. And while its favorable brand awareness gives it meaningful influence over consumers’ dining decisions, the downside is its gross margins make it more challenging to reach positive operating profits compared to other consumer staples businesses. On top of that, its operating margins are low compared to other consumer staples companies.

Dole’s P/E ratio based on the next 12 months is 10.3x. This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $16.67 on the company (compared to the current share price of $14.02).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.