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Why J&J Snack Foods Got Downgraded to ‘Neutral’

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Price movement

J&J Snack Foods (JJSF) has a market cap of $2.5 billion. It rose 1.4% to close at $134.61 per share on January 4, 2017. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 0.67%, 12.2%, and 0.88%, respectively, on the same day.

JJSF is trading 2.6% above its 20-day moving average, 8.2% above its 50-day moving average, and 16.4% above its 200-day moving average.

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Related ETF and peers

The PowerShares S&P SmallCap Low Volatility ETF (XSLV) invests 1.1% of its holdings in JJSF. The YTD price movement of XSLV was 1.4% on January 4, 2017.

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

  • Pinnacle Foods (PF): $6.4 billion
  • TreeHouse Foods (THS): $4.2 billion
  • Snyder’s-Lance (LNCE): $3.7 billion

JJSF’s rating

On January 4, 2017, D.A. Davidson downgraded J&J Snack Foods’ rating to “neutral” from “buy.”

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Performance of J&J Snack Foods in fiscal 4Q16

J&J Snack Foods reported fiscal 4Q16 net sales of $262.2 million, a rise of 0.92% over $259.8 million in fiscal 4Q15. The company’s gross profit margin and operating margin each narrowed 130 basis points between fiscal 4Q15 and fiscal 4Q16.

The company’s net income and EPS (earnings per share) rose to $20.6 million and $1.10, respectively, in fiscal 4Q16, compared to $19.8 million and $1.05, respectively, in fiscal 4Q15.

Fiscal 2016 results

In fiscal 2016, JJSF reported net sales of $992.8 million, a rise of 1.7% YoY (year-over-year). The company’s gross profit margin narrowed 10 basis points in fiscal 2016. Its net income and EPS rose to $76.0 million and $4.05, respectively, in fiscal 2016 compared to $70.2 million and $3.73, respectively, in fiscal 2015.

JJSF’s cash and cash equivalents and inventories rose 5.2% and 7.3%, respectively, between fiscal 2015 and fiscal 2016. Its current ratio rose to 3.5x in fiscal 2016 compared to 3.4x in fiscal 2015.

In the next part of this series, we’ll take a look at Greif (GEF).

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