Trade-Ideas: Pinnacle Foods (PF) Is Today's New Lifetime High Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Pinnacle Foods ( PF) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Pinnacle Foods as such a stock due to the following factors:

  • PF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.5 million.
  • PF has traded 5,419 shares today.
  • PF is trading at a new lifetime high.

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More details on PF:

Pinnacle Foods Inc., through its subsidiaries, manufactures, markets, and distributes branded convenience food products in North America. It operates through three segments: Birds Eye Frozen, Duncan Hines Grocery, and Specialty Foods. The stock currently has a dividend yield of 2.3%. PF has a PE ratio of 19. Currently there are 5 analysts that rate Pinnacle Foods a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Pinnacle Foods has been 1.0 million shares per day over the past 30 days. Pinnacle has a market cap of $4.8 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.24 and a short float of 1.1% with 1.49 days to cover. Shares are up 16.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Pinnacle Foods as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, notable return on equity and solid stock price performance. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.8%. Since the same quarter one year prior, revenues slightly increased by 3.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Food Products industry average. The net income increased by 1.9% when compared to the same quarter one year prior, going from $40.75 million to $41.54 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Food Products industry and the overall market on the basis of return on equity, PINNACLE FOODS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • PINNACLE FOODS INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, PINNACLE FOODS INC increased its bottom line by earning $2.12 versus $0.77 in the prior year. For the next year, the market is expecting a contraction of 10.6% in earnings ($1.90 versus $2.12).

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