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Tootsie Roll Reported Mixed Results in 2Q16

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Price movement

Tootsie Roll Industries (TR) fell by 2.2% to close at $37.13 per share during the fourth week of July 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -2.2%, 2.1%, and 21.7%, respectively, as of July 29. TR is trading 2.1% below its 20-day moving average, 0.21% above its 50-day moving average, and 11.4% above its 200-day moving average.

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Related ETFs and peers

The PowerShares S&P MidCap Low Volatility Portfolio ETF (XMLV) invests 1.3% of its holdings in Tootsie Roll. The ETF tracks a volatility-weighted index of the 80 least volatile S&P MidCap 400 companies. The YTD price movement of XMLV was 17.4% on July 29.

The iShares Russell 2000 Growth ETF (IWO) invests 0.08% of its holdings in Tootsie Roll. The ETF tracks a market-cap-weighted index of US small-cap growth stocks. The index selects from stocks ranked 1,001–3,000 by market cap based on two growth factors.

The market caps of Tootsie Roll’s competitors are as follows:

  • Mondelēz International (MDLZ) — $68.3 billion
  • Hershey (HSY) — $23.6 billion

Performance of Tootsie Roll in 2Q16

Tootsie Roll Industries reported 2Q16 net product sales of $104.3 million, a fall of 3.0% from the net product sales of $107.5 million in 2Q15. Its net income and EPS (earnings per share) rose to $11.13 million and $0.18, respectively, in 2Q16, compared with $11.05 million and $0.17, respectively, in 2Q15.

In 1H16, TR reported net product sales of $207.6 million, a fall of 2.5% from 1H15. Its net income and EPS rose to $21.0 million and $0.34, respectively, in 1H16, compared with $20.2 million and $0.32 in 1H15.

According to Ellen R. Gordon, Tootsie Roll Industries’ chairman, “Second quarter and first half 2016 net sales were
adversely impacted by the effects of a stronger U.S. dollar and related currency translation of foreign sales, as well as the timing of sales to certain customers when compared to the prior year periods. Net earnings in second quarter and first half 2016 benefited from higher price realization on sales, but were adversely impacted by higher costs for ingredients and manufacturing operations.”

In the next part, we’ll take a look at Bemis Company (BMS).

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