Shares of J&J Snack Foods Corp. JJSF scaled a new 52-week high of $126.51 on Nov 25. The stock pulled back to end the trading session at $126.20. This consumer staples company, with a market cap of around $2.36 billion, has seen its shares rise roughly 8% so far this year.
What is Driving J&J?
U.S.-based J&J makes nutritional snack foods and markets nationally to the food service and retail supermarket industries. Its brand names include SUPERPRETZEL, BAVARIAN BAKERY, LUIGI'S & WHOLE FRUIT.
This snack food company recently reported fourth-quarter fiscal 2016 results wherein it missed the Zacks Consensus Estimate for both the top and the bottom line. However, the company registered a 4.8% year-over-year rise in earnings in the quarter. The company’s frozen beverage and retail supermarket businesses performed well in the quarter. This was partially offset by the decrease in sales and operating income at its food service segment.
Total operating expenses, as a percentage of sales, decreased 10 basis points or bps in the quarter with the decrease mainly attributable to slightly lower marketing and distribution costs.
J&J expects to spend approximately $45 million to $50 million in 2017 to improve efficiencies and cost controls.
Consumer staples companies are shifting focus to make healthier and nutritious products in view of increasing health consciousness, rising obesity concerns and growing regulatory pressure.
Food companies like B&G Foods, Inc. BGS and General Mills, Inc. GIS have been rolling out a variety of nutritious products. Natural and organic food/beverages maker, The WhiteWave Foods Company WWAV, United Natural Foods, Inc. UNFI as well as J&J have been benefiting from the strong demand for natural/organic food products and expect the trend to continue.
In the fourth quarter, J&J witnessed higher sales of its new products, especially Oreo churro and WHOLE FRUIT Organic Juice tubes.
Backed by an improving economy, the consumer staples sector has been performing really well among most product categories over the past few months. Lower gas prices and increasing consumer confidence are doing the trick for a number of operators in this space. Importantly, consumer staples are benefiting from their perceived stability and defensive attributes in the current uncertain global backdrop.
J&J currently holds a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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