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Blue Buffalo Pet Products Fell 7% on September 13

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BUFF’s price movements

Blue Buffalo Pet Products (BUFF) has a market cap of $4.9 billion. On September 13, 2016, it fell 7.1% to close at $24.25 per share. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -6.7%, -8.1%, and 29.6%, respectively, that day.

BUFF is trading 6.6% below its 20-day moving average, 5.7% below its 50-day moving average, and 7.7% above its 200-day moving average.

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Related ETF and peers

The iShares Morningstar Mid-Cap Growth (JKH) invests 0.14% of its holdings in Blue Buffalo Pet Products. JKH tracks a market-cap-weighted index of mid-cap companies selected by Morningstar based on their growth characteristics. The YTD price movement of JKH was 2.6% on September 13, 2016.

The market caps of BUFF’s competitors are as follows:

  • Procter & Gamble (PG): $236.5 billion
  • JM Smucker (SJM): $16.3 billion

Latest news on BUFF

Blue Buffalo Pet Products fell more than 7% on September 13, 2016, after the offering of shares by some of its shareholders.

In a press release on September 12, 2016, BUFF “announced that certain of its stockholders intend to offer for sale in an underwritten secondary offering an aggregate of 14,300,000 shares of common stock of Blue Buffalo pursuant to Blue Buffalo’s registration statement on Form S-3, filed with the Securities and Exchange Commission (the ‘Commission’). Blue Buffalo is not offering any shares of common stock in the proposed offering and will not receive any proceeds from the sale of shares in the proposed offering. The offering is expected to close on September 16, 2016, subject to customary closing conditions.”

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Performance of Blue Buffalo Pet Products in 2Q16

Blue Buffalo Pet Products (BUFF) reported 2Q16 net sales of $286.9 million, a rise of 13.0% over $254.0 million in 2Q15. The company’s gross profit margin and operating income rose 12.9% and 53.9%, respectively, between fiscal 2Q15 and fiscal 2Q16.

Its net income and EPS (earnings per share) rose to $36.6 million and $0.18, respectively, in 2Q16, compared to $22.6 million and $0.11, respectively, in 2Q15. It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) and adjusted EPS of $68.3 million and $0.19, respectively, in 2Q16, a rise of 40.5% and 46.2%, respectively, over 2Q15.

BUFF’s cash and cash equivalents and inventories rose 22.0% and 4.8%, respectively, between 4Q15 and 2Q16. Its current ratio rose to 6.1x in 2Q16 from 3.7x in 4Q15.

Projections

Blue Buffalo Pet Products (BUFF) made the following projections for fiscal 2016:

  • net sales of $1.14 billion–$1.15 billion
  • gross margin of ~44%
  • adjusted EPS of $0.74–$0.76, which excludes costs related to litigation and the company’s secondary public offering
  • capital expenditures of $50 million–$60 million
  • effective tax rate of ~37.3%

In the next part of this series, we’ll take a look at Spectrum Brands Holdings (SPB).

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