Pinnacle Foods’ Stock Reaction to Its Earnings Release



Stock price fell

On October 29, Pinnacle Foods (PF) reported its financial results for the third quarter, which ended September 27, 2015. Pinnacle Foods trades on the NYSE (New York Stock Exchange) under the ticker symbol “PF.” The stock fell by 1.4% from $44.61 to $43.97 on the day of the third quarter earnings release. However, it rose by 0.25% the next day, closing at $44.08 on October 30. The stock had started to fall after the second quarter earnings release. However, we saw a rising trend in the month of October, with shares trading in the range of $40–43. The stock has risen 26% since the beginning of the year and 33% in the last 12 months. It closed at $43.62 on November 2.

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Through its subsidiaries, Pinnacle Foods manufactures, markets, and distributes branded convenience food products in North America. It has its headquarters in Parsippany, New Jersey. The company is a part of the packaged food industry, and its peers in the industry include Cal-Maine Foods (CALM), Hormel Foods (HRL), and Flowers Foods (FLO), which all trade on the NYSE. They closed at $54.73, $67.52, and $26.96, respectively, on November 2. The Power Shares DWA Consumer Staples Momentum Portfolio (PSL) invests 2.2% of its portfolio in PF. PSL’s YTD (year-to-date) return is 12.1%. PSL closed at $57.05 on November 2.

Key highlights of 3Q15

  • Consolidated net sales in the third quarter of 2015 increased 2% from the corresponding quarter a year ago.
  • GAAP (generally accepted accounting principles) diluted EPS (earnings per share) totaled $0.41 in the third quarter of 2015, compared to $1.16 in 3Q14.
  • The company witnessed strong growth in its North America Retail business, which comprises the Birds Eye Frozen and Duncan Hines Grocery segments.
  • Growth in the Specialty Foods segment declined.
  • The company reaffirmed its guidance for full-year adjusted diluted EPS of $1.89–$1.91, representing growth of 9–10% compared to the same quarter last year.

Management’s view on performance

Pinnacle Foods chief executive officer Robert J. Gamgort stated, “We are pleased with our performance in the quarter. Strong top- and bottom-line results in North America Retail were driven by the strength of the base business, including the benefit of our recently launched innovation, and the Gardein acquisition. We again outpaced the performance of our composite categories, and we expanded our gross margin meaningfully. We remain confident in our outlook for the full year.”


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