Diamond Foods ( DMND) processes and markets culinary, snack, in-shell and ingredient nuts that are sold through two main product lines: Diamond of California and Emerald Nuts. We upgraded Diamond to buy in April.

Fiscal third-quarter revenue ascended 11% year over year to $111 million as net income increased 144% to $2.7 million and EPS improved 128% to 16 cents, establishing an eight quarter streak of growth. Gross, operating and net margin increased 837, 336 and 133 basis points to 27%, 5.5% and 2.4%, respectively. Return on assets increased 43 basis points to 5.4% and return on equity improved 406 basis points to 13%. Just $1.5 million of cash and a quick ratio of .33 indicate a weak liquidity position. But a debt-to-equity ratio of .74 indicates conservative leverage.

Shares of Diamond have climbed 35% in 2009, outperforming the Dow Jones Industrial Average and the S&P 500. The stock trades at a price-to-earnings ratio around 20, indicating a premium to the market and average peer in the packaged food and meats industry. The stock offers a weak dividend yield of .66%.

Tompkins Financial ( TMP) is the parent of three community banks: Tompkins Trust Company, The Bank of Castile and Mahopac National Bank, which offer commercial banking services to individuals and businesses throughout New York state. We have rated Tompkins Financial buy since October 2007.

Fiscal first-quarter revenue increased 3% year over year to $47 million as net income climbed 3% to $7.7 million and EPS improved 3% to 79 cents. Gross and operating margin increased 526 and 294 basis points to 74% and 37%, respectively, as net margin declined a marginal 5 basis points to 16%. Return on assets eroded 15 basis points to 1% and return on equity shed ten basis points to 13%.

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