Pinnacle Foods Hits 52-Week High - Analyst Blog

By Zacks Equity Research,

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Shares of Pinnacle Foods Inc. ( PF ) reached a 52-week high and eventually closed at $29.21 per share on Mar 12 based on strong outlook for 2014. Pinnacle's share price has increased 6.7% year-to-date. Average volume of shares traded over the last three months came in at approximately 296K.

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On Mar 6, this food company announced strong outlook for 2014 when it reported solid fourth quarter and full-year 2013 results. The company expects double-digit growth in adjusted earnings in 2014. Earnings are expected in the range of $1.75-$1.80 per share, marking an increase of 11.5% to 14.6% from 2013, based on Pinnacle's strong productivity initiatives and a solid innovation pipeline of products.

Despite lower-than-expected sales and earnings in the fourth quarter 2013, the company reported solid year-over-year results. Adjusted earnings of 58 cents surged 11% from the year-ago earnings. Adjusting for the impact of the 53rd week in 2012, earnings grew 15% in the fourth quarter. The upswing was bolstered by higher sales, improved gross margins through effective productivity programs and ongoing improvement in product mix.

Sales, adjusting the 53rd week, increased 4.8% to $709.3 million in the fourth quarter, benefiting from Wish-Bone acquisition and higher volume/mix, partially offset by lower net pricing and foreign currency headwinds. Adjusted gross profits increased 2.5% to $204.5 million, while gross margin expanded 50 basis points to 28.8% owing to productivity savings.

In fiscal 2013, earnings grew 39% to $1.57 per share, in-line with the Zacks Consensus Estimate. Sales increased 0.6% to $2.5 billion, in-line with the Zacks Consensus Estimate, benefiting from the Wish-Bone acquisition and higher volume/mix, partially offset by foreign currency headwinds.

In Oct 2013, Pinnacle Foods completed the acquisition of Wish-Bone salad dressing business from consumer giant Unilever Plc ( UL ). Wish-Bone contributed $38 million to net sales and 2 cents to adjusted earnings in 2013. In 2013, the company also reduced its ongoing annual interest expense significantly due to a debt pay-down associated with its Mar 2013 IPO and refinancing actions taken in both 2012 and 2013.

Pinnacle Foods holds a Zacks Rank #3 (Hold). Other better-ranked food companies in the industry include Diamond Foods Inc ( DMND ) and Post Holdings, Inc. ( POST ), both of which have a Zacks Rank #2 (Buy).

DIAMOND FOODS (DMND): Free Stock Analysis Report

PINNACLE FOODS (PF): Free Stock Analysis Report

POST HOLDINGS (POST): Free Stock Analysis Report

UNILEVER PLC (UL): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: DMND , PF , POST , UL

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