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.
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).