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J&J Snack Upgraded to Strong Buy

Zacks Equity Research

Zacks Investment Research upgraded J&J Snack Foods (JJSF) to a Zacks Rank #1 (Strong Buy) on Jan 30, 2013.

Why the Upgrade?

On Jan 28, 2013, J&J Snack Foods reported a solid first quarter of fiscal 2013 (ended Dec 29, 2012) financial results. Earnings per share of 54 cents were 86% above the year-ago earnings and 22.7% above the Zacks Consensus Estimate of 44 cents.

Revenue increased by 11% to $172.7 million on the back of strong growth in foodservice and frozen beverage businesses. Sales in the Food Service segment were driven primarily by improvement in soft pretzels, churros and bakery product sales while Frozen Beverages revenue grew as sales of beverages as well as machines increased.

Operating margin in the quarter stood at 7.9%, up 300 basis points year over year. Slight increase in cost of sales and operating expenses were more than offset by higher revenue growth.

Four straight quarters of positive earnings surprise, with the average being 13.5%, raises optimism for a better quarter ahead. For the second quarter and fiscal year 2013, we have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of +5.0% and +2.8%, respectively.
Following the first quarter results, in the last 7 days, the Zacks Consensus Estimate for fiscal 2013 increased by 4.1% to $3.27 while that for fiscal 2014 went up 4.5% to $3.51.

Other Stocks to Consider

The stock currently bears a Zacks Rank #1 (Strong Buy). Other stocks worth a look in the industry are B&G Foods Inc. (BGS), Flowers Foods, Inc (FLO) and Ingredion Incorporated (INGR), each holding a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on BGS

Read the Full Research Report on INGR

Read the Full Research Report on JJSF

Read the Full Research Report on FLO

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