Blue Buffalo Pet Products (BUFF) has a market cap of $4.6 billion. It fell 0.77% to close at $23.20 per share on June 28. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -6.7%, -11.5%, and 24.0%, respectively, on the same day.
BUFF is trading 7.5% below its 20-day moving average, 7.6% below its 50-day moving average, and 12.0% above its 200-day moving average.
Related ETF and peers
The iShares Morningstar Small-Cap Growth ETF (JKK) invests 0.18% of its holdings in Blue Buffalo Pet Products. The ETF tracks a market-cap-weighted index of the US small-cap growth stocks. The index selects from the 70% to 90% segment of the market cap based on five factors. The YTD price movement of JKK was -3.2% on June 28.
The market caps of BUFF’s competitors are as follows:
Blue Buffalo offered secondary shares
In a press release on June 28, 2016, Blue Buffalo Pet Products stated the following: “Blue Buffalo Pet Products has announced the pricing of the secondary offering of shares of its common stock pursuant to a registration statement on Form S-1, filed with the Securities and Exchange Commission. Existing stockholders of Blue Buffalo are selling 15,000,000 shares of common stock in the offering. The underwriters in the offering will have a 30-day option to purchase up to an additional 2,250,000 shares of common stock. The public offering price is $22.0 per share. The offering is expected to close on July 5, 2016, subject to customary closing conditions.”
J.P. Morgan Securities, Citigroup Global Markets, Barclays Capital, Deutsche Bank Securities, and Morgan Stanley & Co. are acting as joint book-running managers for the offering. J.P. Morgan Securities and Citigroup Global Markets are also acting as representatives of the underwriters. Wells Fargo Securities is acting as co-manager for the offering.
Performance in 1Q16
Blue Buffalo Pet Products reported 1Q16 net sales of $2.8 billion million—a rise of 12.5% compared to net sales of $2.5 billion in fiscal 1Q15. The company’s cost of sales as a percentage of net sales fell 6.7%. Its operating income rose 21.9% in 1Q16 from 1Q15.
Its net income and EPS (earnings per share) rose to $37.3 million and $0.19, respectively, in fiscal 1Q16 from $30.0 million and $0.15, respectively, in 1Q15. The company reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $67.7 million in 1Q16—a rise of 20.5% compared to 1Q15.
Blue Buffalo Pet Products’ cash and cash equivalents rose 18.2%, and its inventories fell 8.7% in 1Q16 from fiscal 4Q15. Its current ratio rose to 5.9x from 3.7x in 4Q15.
The company made the following projections for 2016:
- net sales of $1.13 billion–$1.14 billion
- gross margin of 43%–44%
- adjusted EPS of $0.73–$0.74, excluding costs related to litigation
- capital expenditure of ~$70 million–$80 million
In the next part of this series, we’ll take a look at some updates from Toyota Motor (TM).