UPDATE: S&P Raises Outlook on Diamond Foods (DMND) to Positive; Profitability Continues Showing Modest Improvement

(Updated - January 29, 2015 2:53 PM EST)

Standard & Poor's Ratings Services revised its outlook on San Francisco-based Diamond Foods Inc. (Nasdaq: DMND) to positive from stable. We also affirmed all ratings on the company, including our 'B-' corporate credit rating.

"The outlook revision reflects our expectation that Diamond's operating performance has stabilized and profitability has continued to modestly improve," said Standard & Poor's credit analyst Bea Chiem. "We believe that the majority of the company's legal and accounting issues are largely behind it and that new management has made progress in improving the company's operating performance through cost reductions, product innovations, and improved walnut supplies."

We could raise the company's ratings within the next 12 months if the company is able to sustain its improved operating performance and profitability and does not experience additional operational or legal issues, resulting in our improved view of the company's business risk profile.

We estimate that Diamond's adjusted debt outstanding as of Oct. 31, 2014, was approximately $675.2 million.

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