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Consumer Sector: Key Events in the Second Week of August

PART:
1 2 3 4 5 6 7 8
Part 5
Consumer Sector: Key Events in the Second Week of August PART 5 OF 8

Analyzing Snyder’s-Lance Performance in 2Q16

Price movement

Snyder’s-Lance (LNCE) rose by 2.8% and closed at $35.29 per share during the second week of August 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 2.8%, 1.6%, and 4.0%, respectively, as of August 12. Snyder’s-Lance is trading 1.1% above its 20-day moving average, 4.9% above its 50-day moving average, and 6.6% above its 200-day moving average.

Analyzing Snyder’s-Lance Performance in 2Q16

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Related ETFs and peers

The iShares Russell 2000 Value ETF (IWN) invests 0.34% of its holdings in Snyder’s-Lance. IWN 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. IWN’s YTD price movement was 13.0% on August 12.

The iShares Russell 2000 ETF (IWM) invests 0.17% of its holdings in Snyder’s-Lance. IWM 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 peers are as follows:

  • PepsiCo (PEP) – $156.1 billion
  • J&J Snack Foods (JJSF) – $2.3 billion

Performance in fiscal 2Q16

Snyder’s-Lance reported fiscal 2Q16 net revenue of $609.5 million—a rise of 41.3% compared to net revenue of $431.4 million in fiscal 2Q15. The company’s gross profit margin and EBIT (earnings before interest and taxes) rose by 2.0% and 36.9%, respectively, in fiscal 2Q16—compared to the same period last year. It reported impairment charges of $0.489 million in fiscal 2Q16.

Its net income rose to $19.7 million and its EPS (earnings per share) fell to $0.20 in fiscal 2Q16—compared to net income and EPS of $17.3 million and $0.24, respectively, in fiscal 2Q15. It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) and adjusted EPS of $78.6 million and $0.28, respectively, in fiscal 2Q16—a rise of 56.6% and 3.7%, respectively—compared to fiscal 2Q15.

Snyder’s-Lance’s cash and cash equivalents fell by 3.6% and its inventories rose by 106.0% in fiscal 2Q16—compared to fiscal 4Q15. Its current ratio fell to 1.7x and its DE (debt-to-equity) ratio rose to 1.1x in fiscal 2Q16—compared to a current ratio and a DE ratio of 2.2x and 0.63x, respectively, in fiscal 4Q15.

Quarterly dividend

Snyder’s-Lance declared a regular cash dividend of $0.16 per share on its common stock. The dividend will be paid on August 31, 2016, to shareholders of record at the close of business on August 23, 2016.

Projections

The company 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’ 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 the net price realization from lower commodity costs.
  • Adjusted EBITDA of $313 million–$325 million
  • Capital expenditures of $80 million–$85 million
  • EPS of $1.22–$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.
  • Net interest expense of $33 million–$35 million
  • Effective tax rate of 34%–35%

It expects EPS $0.28–$0.31 for fiscal 3Q16.

In the next part, we’ll look at Brunswick (BC).

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