uploads///Pinnacle Foods EPS Beat Estimates in Q

What Contributed to a 9% Rise in Pinnacle’s 4Q15 Earnings?


Mar. 12 2016, Updated 9:04 p.m. ET

Earnings rose 9%

Pinnacle Foods (PF) reported 4Q15 net earnings of $82.5 million. This was an increase of 9.7% compared to net earnings of $75.2 million in 4Q14. The diluted EPS (earnings per share) for 4Q15 was $0.70—an increase of 9% from an EPS of $0.64 in fiscal 4Q14.

The company saw positive earnings growth since fiscal 1Q14. It continued its positive earnings growth in this quarter. The company has beat or been in line with the earnings estimates for the past few quarters. It even beat the estimates by 1.4% this quarter. For full-year 2015, the net income was $224.9 million—a rise of 10.6%. Its net income was $203.4 million in 2014. The EPS was $1.92 for the year.

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What benefited the EPS?

The full-year 2015 EPS had a $0.03 impact from currency translation. The growth in full-year earnings was aided by strong growth in operating income along with a lower effective tax rate and lower interest expense. Analysts who follow the company are forecasting an earnings increase this year of 8.7% compared to last year. Next year, analysts expect earnings growth of 10.9% over this year’s forecast earnings. They also expect the company to grow its earnings at an average annual rate of 8.1% over the next five years.

Management’s view

Pinnacle’s CEO, Bob Gamgort, stated that “This past year was another strong one for Pinnacle, driven by strength of the base business, highly-successful innovation and the addition of Gardein to our portfolio. For the fourth consecutive year, we grew our composite market share, and we again delivered strong gross margin expansion and double-digit growth in adjusted diluted EPS.”

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Recent dividend

On February 11, the company announced a quarterly cash dividend of $0.255 per share. It’s payable on April 8, 2016, to all common stockholders of record at the close of business on February 23. Pinnacle Foods has a dividend yield of 2.3% as of February 26. So far in 2016, the company has paid $0.51 in dividends. Out of this, $0.255 was paid on January 8 to stockholders of record at the close of business on December 21, 2015.

Peers’ earnings

Pinnacle’s peers in the industry include Treehouse Foods (THS), General Mills (GIS), and McCormick & Company (MKC). They reported EPS of $0.85, $0.87, and $1.16 for the last quarter, respectively. To gain exposure to Pinnacle Foods, you can invest in ETFs like the Guggenheim Mid-Cap Core ETF (CZA) and the First Trust US IPO Index Fund (FPX). They invest 1.1% in the stock.

Next, we’ll discuss the revenue that the company generated in 4Q15 and full-year 2015.


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