Why Annie's (BNNY) Is Down Today

NEW YORK (TheStreet) -- Annie's  (BNNY) was falling 10.43% to $37.47 on Tuesday after the organic food maker lowered its earnings per share guidance for the fiscal year that runs through March.

The company said it expects EPS of 92 cents to 93 cents for the fiscal year, a decrease from its previous forecast of 97 cents to $1.01 a share. Analysts expect fiscal 2014 earnings of 97 cents a share. 

Annie's uses organic wheat to make its pasta and some of its other products, and CEO John Foraker noted in the company's report that the organic wheat supply would decrease in the fourth quarter.

"We expect solid adjusted earnings per share growth in the fourth quarter, despite tight supply conditions in the organic wheat market, the timing of certain productivity projects and a later Easter holiday this year," Foraker said.

The company reported a 21.7% increase in adjusted net sales to $46.1 million in the third quarter; adjusted EPS in the quarter rose 7.6% to 17 cents a share. 

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TheStreet Ratings team rates ANNIE'S INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about its recommendation:

"We rate ANNIE'S INC (BNNY) 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 notable return on equity. However, as a counter to these strengths, we find that the stock itself is trading at a premium valuation."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 0.5%. Since the same quarter one year prior, revenues rose by 24.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • BNNY has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, BNNY has a quick ratio of 1.57, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 36.25% is the gross profit margin for ANNIE'S INC which we consider to be strong. Regardless of BNNY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.58% trails the industry average.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • You can view the full analysis from the report here: BNNY Ratings Report

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