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Moody’s Rating Boosted the Stock Price of Pinnacle Foods

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Price movement of Pinnacle Foods

Pinnacle Foods (PF) has a market cap of $5.0 billion. PF rose by 0.90% to close at $42.76 per share on January 6, 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis is -0.79%, -0.62%, and 0.71%, respectively.

At times, the stock has broken the support of all moving day averages. Currently, PF is trading 0.79% above its 20-day moving average, 0.55% above its 50-day moving average, and 0.16% below its 200-day moving average.

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The PowerShares DWA Consumer Staples Momentum Portfolio (PSL) invests 2.3% of its holdings in Pinnacle Foods. The ETF tracks an index of US consumer cyclical firms selected and weighted by price momentum. The YTD price movement of PSL is -1.1% as of January 5, 2016. The Guggenheim Mid-Cap Core ETF (CZA) invests 0.68% of its holdings in Pinnacle Foods.

The market caps of Pinnacle Foods (PF) and its competitors are as follows:

  • Mondelez International (MDLZ): $69.9 billion
  • General Mills (GIS): $33.7 billion
  • ConAgra Foods (CAG): $18.1 billion

Moody’s rating for Pinnacle Foods

Moody’s Investor Service has confirmed the Ba2 senior secured rating and affirmed all other ratings of Pinnacle Foods Finance. Pinnacle Foods entered into a definitive agreement to acquire Boulder Brands for $975 million. The rating outlook is stable.

Moody’s also has assigned a Ba2 rating to a $550 million senior secured term loan and a B2 rating to $350 million of senior unsecured debt. These debt instruments will be issued to fund a tender offer for Boulder common shares.

Performance of Pinnacle Foods in fiscal 3Q15

Pinnacle Foods (PF) reported fiscal 3Q15 net sales of $636.3 million, a rise of 2.0% when compared to net sales of $624.0 million in fiscal 3Q14. It reported an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $122.1 million in fiscal 3Q15. Its net income and EPS (earnings per share) fell to $48.1 million and $0.41, respectively, in fiscal 3Q15, as compared to net income and EPS of $136.0 million and $1.16, respectively, in fiscal 3Q14.

Meanwhile, its cash and cash equivalents and inventories rose by 36.7% and 21.8%, respectively, in fiscal 3Q15 on a quarterly basis. Its debt-to-equity ratio rose to 1.99 in fiscal 3Q15 as compared to a debt-to-equity ratio of 1.97 in fiscal 3Q14.

The company has projected an adjusted EPS in the range of $1.89 to $1.91 for fiscal 2015.

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