NEW YORK (TheStreet) -- Shares of Annie's Inc. (BNNY) are up 37.30% to $46.01 in pre-market trade after it was reported that General Mills (GIS) is acquiring the California-based natural and organic food company for about $820 million, Bloomberg reports.
Annie's investors will receive $46 a share in cash, General Mills said in a statement, 37% above its closing price yesterday.
The deal, expected to close this year, will pair Annie's products with General Mills' existing organic foods, including the Cascadian Farm and Food Should Taste Good brands, Bloomberg said.
TheStreet Ratings team rates ANNIE'S INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ANNIE'S INC (BNNY) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, unimpressive growth in net income, disappointing return on equity, premium valuation and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The share price of ANNIE'S INC has not done very well: it is down 24.49% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food Products industry. The net income has significantly decreased by 156.2% when compared to the same quarter one year ago, falling from $2.17 million to -$1.22 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. When compared to other companies in the Food Products industry and the overall market, ANNIE'S INC's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for ANNIE'S INC is currently lower than what is desirable, coming in at 29.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.81% is significantly below that of the industry average.
- You can view the full analysis from the report here: BNNY Ratings Report