NEW YORK (TheStreet) – With year-to-date gains of 22%, Pinnacle Foods (PF) , which owns popular brands such as Duncan Hines baking mixes and Lender’s bagels, has fed its shareholders with impressive returns.
Not only has the stock outperformed the packaged-food industry's 18.4% gain, according to Morningstar, Pinnacle, which reports its third-quarter earnings Wednesday, has exceeded the 6.2% and 10.2% returns of the Dow Jones Industrial Average (DJI) and S&P 500 (SPY) , respectively. Investors still want more. And they're likely to get it.
Granted, the past six months have been tough for companies in the packaged-food industry. Weak sales volume and compressed profit margins have hurt the companies. Pinnacle has been thrown in with the rest of them, even though its margins have been stable.
The chart below, courtesy of Google Finance, shows how volatile Pinnacle's share price has been over the past six months.
What's more important to consider here, however, is that Pinnacle's shares are trading very close to where they were in May -- following a $4.2 billion buyout offer from Hillshire Brands (HSH) . The offer gave Pinnacle's stock a 13% one-day jump, but the deal has since been canceled.
And while it is possible another buyer will emerge for Pinnacle, it's unlikely investors are solely focused on this and keeping the stock trading near its Hillshire Brands buyout level. Instead, Pinnacle's cost-reduction effort, which boosted profit margins and cash flow, without sacrificing its operations, is the more likely reason why the stock has maintained its trading level.