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Blue Buffalo Pet Products Reaffirms Its 2016 Projections

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Price movement

Blue Buffalo Pet Products (BUFF) has a market cap of $5.0 billion. It fell by 0.15% to close at $25.94 per share on September 7, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 0.31%, -1.6%, and 38.6%, respectively, on the same day.

BUFF is trading 0.37% below its 20-day moving average, 1.7% above its 50-day moving average, and 16.1% above its 200-day moving average.

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Related ETF and peers

The iShares Morningstar Mid-Cap Growth Index ETF (JKH) invests 0.14% of its holdings in Blue Buffalo Pet Products. The ETF 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 6.0% on September 7.

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

  • Procter & Gamble (PG) — $235.1 billion
  • J.M. Smucker (SJM) — $16.2 billion

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 its net sales of $254.0 million in 2Q15. The company’s gross profit margin and operating income rose by 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 with $22.6 million and $0.11, respectively, in 2Q15. It reported adjusted EBITDA[1. 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 by 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) has made the following projections for fiscal 2016 at Barclays 2016 Consumer Staples Conference:

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

In the final part of this series, we’ll discuss Ford Motor Company (F).

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