Questions Resurface Over At Diamond Foods (DMND)

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Diamond Foods, Inc. (NASDAQ: DMND) had a huge day on Friday after a research report indicated that the company’s accounting review would not yield much in irregularities in payments to walnut growers.  A report in the Wall Street Journal from the weekend is taking back some of those gains.

The report noted that some walnut growers have challenged the company’s explanation of ‘mysterious payments’ made to them.  Some payments were called an advance while other growers have said that they do not intend to make certain future deliveries to the company.

The big question is whether the payments made managed to pad the earnings results.  KeyBanc’s key moving analyst call on Friday noted that this is not likely to be material. If so, Diamond Foods may have been even more overvalued than it was before the scandal.  This report may also only add pressure to the company’s acquisition of Pringles from Procter & Gamble.

Diamond Foods closed at $40.56 on Friday, up from hitting a 52-week low of $26.37 just last week and its 52-week trading range is $26.37 to $96.13.  Shares are down 8.6% at $37.07 on fairly active trading in the pre-market trading session.