News

Although the Zacks Food-Miscellaneous Industry is in the top 28% of over 250 Zacks industries, one noticeable laggard is J&J Snack Foods JJSF with its stock landing a Zacks Rank #5 (Strong Sell) and the Bear of the Day.

In what it has called a softer consumer environment, the snacks, pastries, and frozen beverage provider is also operating in a very competitive landscape that features competitors such as Mondelez International MDLZ, Conagra Brands CAG, Utz Brands UTZ, and Kellogg KLG among others.

Q1 Earnings Miss

Causing concern was J&J Snack Foods’ fiscal first quarter earnings of $0.52 a share in February, which widely missed the Zacks Consensus of $0.87 per share by -40%. Quarterly sales of $348.31 million missed estimates by -4% with the company citing declines in consumer traffic and consumption for its much weaker-than-expected results.

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Transpiring from the earnings miss, EPS estimates for fiscal 2024 and FY25 have fallen -10% and -8% over the last 60 days respectively. This has started to dull the anticipation of J&J Snack Foods expansive bottom line with annual earnings still forecasted to rise 12% this year and projected to expand another 13% in FY25 to $5.72 per share.

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Premium Fears & Recent Performance

While J&J Snack Foods’ EPS growth may still be enticing the downward earnings estimate revisions suggest more short-term volatility ahead. To that point, JJNF has now dropped -13% year to date to noticeably lag the S&P 500’s +10% and the Zacks Food-Miscellaneous Market’s +5%.

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Furthermore, with J&J Snack Foods’ stock trailing the performances of many of its direct competitors it’s noteworthy that JJNF trades at a 28.3X forward earnings multiple which is considerably higher than the industry average of 17.6X and the S&P 500’s 22.1X.

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Bottom Line

On the surface, J&J Snack Foods' bottom line expansion may be enticing but the trend of declining earnings estimates paints a cautionary tale. This is especially true considering its stock trades at a premium and has underperformed many of its industry peers.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.