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KeyBanc Capital Rated Snyder’s-Lance as ‘Sector Weight’

Gabriel Kane

Yesterday’s Consumer Pops and Drops: LNCE, NKE, and FLO

(Continued from Prior Part)

Price movement of Snyder’s-Lance

Snyder’s-Lance (LNCE) has a market cap of $2.9 billion. It fell by 0.36% to close at $30.51 per share on May 26, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 2.7%, -5.1%, and -10.1%, respectively.

This means that LNCE is trading 2.6% below its 20-day moving average, 2.5% below its 50-day moving average, and 8.3% below its 200-day moving average.

Related ETFs and peers

The iShares Russell 2000 Value ETF (IWN) invests 0.17% of its holdings in LNCE. This ETF tracks an index of US small-cap value stocks. The index selects value stocks from a universe of stocks ranked 1,001–3,000 by market cap. The YTD price movement of IWN was 4.8% on May 26, 2016.

The iShares Russell 2000 ETF (IWM) invests 0.08% of its holdings in LNCE. This ETF tracks a market-cap-weighted index of US small-cap stocks. The index selects stocks ranked 1,001-3,000 by market cap.

The market caps of Snyder’s-Lance’s competitors are as follows:

  • PepsiCo (PEP) — $149.0 billion
  • J&J Snack Foods (JJSF) — $2.0 billion

KeyBanc Capital Markets has initiated the coverage of Snyder’s-Lance with a “sector weight” rating.

Performance in fiscal 1Q16

Snyder’s-Lance reported fiscal 1Q16 net revenue of $462.8 million—an increase of 15.0% compared to net revenue of $402.3 million in fiscal 1Q15. The company’s cost of sales as a percentage of net revenues was 6.2% in fiscal 1Q16 compared to the same period last year. It reported transaction-related expenses and impairment charges of $49.3 million and $0.4 million, respectively, in fiscal 1Q16.

Its net income and EPS (earnings per share) fell to -$25.4 million and -$0.32, respectively, in fiscal 1Q16 compared to $10.6 million and $0.15, respectively, in fiscal 1Q15. It reported non-GAAP EPS of $0.25 in fiscal 1Q16, an increase of 47.1% compared to fiscal 1Q15.

Snyder’s-Lance’s cash and cash equivalents and inventories rose by 2.8% and 131.3%, respectively, in fiscal 1Q16 compared to fiscal 4Q15. Its current ratio fell to 1.7x and its debt-to-equity ratio rose to 1.1x in fiscal 1Q16. This is compared to a current ratio and a debt-to-equity ratio of 2.2x and 0.63x, respectively, in fiscal 1Q15.

Projections

Snyder’s-Lance made the following projections for fiscal 2016:

  • It expects net revenue of $2.29 billion–$2.33 billion. This excludes the contribution from Diamond Foods’s net revenue growth of flat up to 2%. The net revenue contribution from Diamond Foods of ~$630 million–$650 million for the ten months beginning February 29, 2016, reflects the negative impact of unfavorable foreign currency and net price realization from lower commodity costs.
  • The company expects adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $310 million–$325 million
  • The capital expenditure is expected to be $80 million–$85 million.
  • It expects EPS of $1.20–$1.30. This excludes special items and charges from the Diamond Foods acquisition. This projection includes the impact of -$0.10 to -$0.12 per share from purchase accounting adjustments.
  • The company expects interest expenses of $33 million–$35 million.
  • The effective tax rate is expected to be 34%–35%

Now, let’s take a look at Nike (NKE).

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