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Snyder’s-Lance (LNCE) Plans to Divest Diamond of California

Zacks

Snyder’s-Lance, Inc. LNCE intends to sell its Diamond of California culinary nut business to Blue Road Capital in order to increase focus on core brands.

The company did not disclose the terms of this definitive agreement, which is expected to close by the end of 2016.

Post the acquisition of Diamond Foods, Inc. in Feb 2016, Snyder’s-Lance entered into the culinary nuts business that contributed $42.9 million to its third-quarter 2016 net revenue.

SNYDERS-LANCE Price

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Carl E. Lee, Jr., President and Chief Executive Officer at Snyder’s-Lance said, “This strategic transaction will allow us to concentrate on our core business of providing our consumers and retail partners with our premium portfolio of snack brands focused on better ingredients, quality and taste.”

Meanwhile, Snyder’s-Lance is on track to slash leverage to less than 4.0x by the end of 2016 and 3.0x by the close of 2017. Hence, this sale agreement is in sync with the company’s plans to reduce leverage.

Additionally, the company stated that the divestiture will not materially impact its full-year 2016 outlook. As such, Snyder’s-Lance has maintained its previously issued full-year 2016 outlook. For 2016, the company expects earnings per share in the range of $1.24 to $1.30 on revenues of $2,290 million to $2,310 million. Adjusted EBITDA is projected in the $310 million to $320 million band.

Charlotte, NC-based Snyder's-Lance manufactures and markets snack foods throughout the U.S. and internationally. The company’s products include pretzels, sandwich crackers, pretzel crackers, potato chips, cookies, tortilla chips, restaurant style crackers, popcorn, nuts and other snacks.

Snyder’s-Lance has a decent earnings surprise history, beating the Zacks Consensus Estimate in three out of the last four quarters with an average positive earnings surprise of 6.80%.

Zacks Rank & Key Picks

Snyder’s-Lance carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the food space include General Mills, Inc. GIS, Lancaster Colony Corporation LANC and Mondelez International, Inc. MDLZ, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

General Mills has a decent earnings surprise history, beating the Zacks Consensus Estimate in three out of the last four quarters with an average positive earnings surprise of 4.37%.

Lancaster Colony’s fiscal 2017 earnings are expected to grow 7.3%.

Mondelez will likely witness 11.5% EPS growth in 2016.

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