NEW YORK (TheStreet) --Shares of Boulder Brands Inc. (BDBD) are falling by 21.92% to $9.94 on heavy volume in mid-morning trading on Wednesday, after the company issued updated guidance for the 2014 third quarter, which came in below previous estimates and analyst expectations.
For the quarter ended September 30, 2014, the supplier of gluten-free and health and wellness products in the U.S. and Canada, said it's anticipating non-GAAP diluted earnings per share to be approximately 8 cents, compared to the company's prior guidance of EPS between 10 cents and 12 cents.
The Capital IQ Consensus called for earnings of 11 cents per share for the third quarter.
Boulder Brands said revenue for the latest quarter is expected to be $133.9 million, a 13% increase over the 2013 third quarter, but below the Capital IQ Consensus of $142.05 million.
"During the third quarter, we faced a number of headwinds that impacted our financial results. Smart Balance continued to face challenges in the spreads category, resulting in a larger than expected decline," said company CEO Stephen Hughes.
"In addition, as noted on our second quarter call, the mix shift of our fast-growing, lower margin Natural segment is significantly outpacing our higher margin Balance segment and is therefore putting increased pressure on our gross margins," Hughes added.
Separately, TheStreet Ratings team rates BOULDER BRANDS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate BOULDER BRANDS INC (BDBD) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 0.9%. Since the same quarter one year prior, revenues rose by 18.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.80, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.79 is somewhat weak and could be cause for future problems.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Food Products industry average. The net income has decreased by 10.0% when compared to the same quarter one year ago, dropping from $3.10 million to $2.79 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Food Products industry and the overall market, BOULDER BRANDS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: BDBD Ratings Report