Del Monte Foods (DLM) is an under the radar stock for many investors, but the underlying value of a well run company is hard to deny. DLM reported fiscal second quarter results on Thursday morning that were much better than expected and the stock is up nearly 4% on the announcement. Del Monte earned about $62.6 million or $.31 per share, which was ten cents better than the consensus analyst's estimate. This is the second straight quarter where the company has reported record quarterly profits. The stock may have gotten an even bigger boost if sales had exceeded expectations. Net sales of $959 million compared favorably to the $901 million in the period a year ago, but the 6.4% grow was less than the 8% that the analysts hoped to see.

In addition to the successes of the second quarter through sales gains and constraining costs, Del Monte management also lifted earnings guidance for the full year. The company had previously guided earnings per share to come in between 88 and 92 shares, and they are raising those predictions by five cents on each side of the range. Considering the

 company has already earned $.61 per share in the first half of the year, this guidance still appears fairly conservative. However, by using the middle of this guided earnings range the forward looking P/E multiple is under 12x. That is extremely cheap especially for a company that has beaten estimates in each quarter for the past two years, and management has reiterated it will continue with its Accelerated Growth Plan which has already shown impressive results.

We are reiterating our Undervalued stance on DLM after another impressive quarter, even though the stock has had a nice run of late. Based on the current fundamentals, we would expect the company to trade somewhere in the mid to high teens, as it looks undervalued on both a price-to-cash earnings and a price-to-sales basis. Management has impressed us recently in improving Return on Equity through better profit margins and at the same time lessening their debt exposure. This is one stock that looks fundamentally more and more attractive to long term investors as each successful quarter passes.