J&J Snack Foods Corp.
) reported record second-quarter earnings that came in 25.0% ahead
of the Zacks Consensus Estimate, sending shares of this nutrition
food company higher by almost 14% the day after the announcement on
April 23, 2012. Earnings estimates have been moving higher since
then, making this Zacks #1 Rank (Strong Buy) stock a solid momentum
Solid Second Quarter Results
J&J Snack Foods' fiscal second quarter 2012 adjusted earnings
of 55 cents per share surpassed the Zacks Consensus Estimate of 44
cents. Earnings also jumped 19.5% on a year-over-year basis driven
by solid top-line growth.
Total net sales grew 16.0% year over year to $189.6 million, which
beat the Zacks Consensus Estimate of $182.0 million. Organically,
excluding sales derived from last year's acquisition of the frozen
handheld business of ConAgra Foods (
), the top line grew 8%. Strong performances from foodservice, soft
pretzels, frozen juices and ices, churros and bakery products
boosted the top line.
Despite the top-line growth, gross margins contracted 160 basis
points to 28.5% as sales growth was offset by higher input costs
and lower margins on the acquired handheld sales. Operating income,
nonetheless, increased 17% to $16.3 million as gross margin
headwinds were mitigated by lower operating expenses.
J&J Snack Foods' strong second quarter resulted in an uptrend
in estimate revisions. The Zacks Consensus Estimate has risen by
6.4% to $2.81 for fiscal 2012 and by 5.6% to $3.01 for fiscal 2013
over the last 60 days.
J&J Snack Foods' valuation looks a bit expensive. The stock
currently trades at a forward price-to-earnings (P/E) of 20.55x,
reflecting a 68% premium to the peer group average of 12.4x. On a
price-to-book basis, the shares trade at 2.42x, a 24% premium to
the peer group average of 1.95. Also, the stock has a trailing
12-month return on equity (ROE) of 11.2%, which is in line with its
peer group average.
Shares of J&J Snack Foods traded in the $55-$55 range after
rising sharply on solid second quarter results. The stock reached a
52-week high of $58.09 on June 20, a few days after the
announcement of the synergistic acquisition of Kim & Scott's
Gourmet Pretzels, a Chicago based small soft pretzel company.
Moreover, the stock is currently trading above its 50- and 200-day
moving averages, which stand at $54.50 and $51.36, respectively. In
fact, the stock has been consistently trading above its 50-day and
200-day moving averages since mid-April 2012.
Volume is fairly strong, averaging roughly 49K daily. The
year-to-date return for the stock is 8.27% compared with the
S&P 500's return of 5.40%.
Based in Pennsauken, New Jersey, J&J Snack Foods manufactures
nutritional snack foods and distributes frozen beverages to the
food service and retail supermarket industry in the US, Canada and
Mexico. Its products include soft pretzels, frozen juice treats and
desserts, churros, dough enrobed handheld products and baked goods,
Italian ice and frozen fruit bars. The market cap of the company is
J&J SNACK FOODS (JJSF): Free Stock Analysis
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