On Jan 8, Zacks Investment Research downgraded materials
) to a Zacks Rank #5 (Strong Sell).
Landec, on Jan 2, released its results for second-quarter
fiscal 2014 (ended Nov 24, 2013). The company posted earnings of
13 cents per share, down roughly 62% from 34 cents in the
corresponding year-ago period. The results were, however, in line
with the Zacks Consensus Estimate.
Revenues increased 5% year over year to $120 million due to a
12% rise in the company's Apio's value-added businesses' revenues
and a 13% increase in revenues at Lifecore. Sales, however,
missed the Zacks Consensus Estimate of $124 million.
Gross profit from Apio's value-added vegetable business was
lower in the second quarter compared to the year-ago comparable
period due to severe shortages of certain key commodities, mainly
green beans and broccoli, as a result of weather-related
availability and quality issues. These shortages resulted in
higher than projected produce cost, thus reducing Apio's
value-added gross profit by $4.4 million during the quarter.
Landec faced produce sourcing challenges during the first half
of fiscal 2014 due to weather-related problems along the East
Coast as well as in California and Mexico, the top three
vegetables growing areas in North America. Severe rain storms
negatively impacted the company's cost for green beans along the
East Coast. California also has been facing a series of produce
growing problems. There have been persistent periods of mixed,
hot and cold temperatures in California's Central Coast growing
region that have affected farmers' yields.
Since Jul 2013, the farmers have experienced increased pest
pressures resulting in lower yields and product quality issues.
Mexico had three severe tropical storms in the last six
Landec is focusing on managing and mitigating its sourcing
risk by diversifying growing regions and modifying its
contracting practices to deal with these challenges. The
company's foremost priority for the next several quarters is to
stabilize its produce sourcing requirements and ensure that it
can deliver reliable quantities of healthy pre-packaged produce
products to retailers, club stores and food service
The Zacks Consensus Estimate for fiscal 2014 for Landec
decreased roughly 14.3% to 72 cents per share since the last 60
days. The Zacks Consensus Estimate for fiscal 2015 has also
declined 6.7% to 98 cents per share over the same period.
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Other companies in the chemical-plastics industry worth
Westlake Chemical Corporation
A. Schulman, Inc.
), each holding a Zacks Rank #2 (Buy).