Quick Take On John B. Sanfilippo & Son Earnings

| About: John B. (JBSS)

John B. Sanfilippo & Son (NASDAQ:JBSS) released second quarter earnings after the close reporting $0.83 per share up from $0.76 in the year-ago period. Our quick takes

Positives:

  • EBITDA less capital expenditures through the first six months is $30.56 million. With a sub $300 million market cap the stock is extremely undervalued on an FCF basis.
  • Sales were up by 12% by volume and 4.4% net.
  • Revolving Credit and LTD down by almost $9.0 million.
  • Strong free cash flow and considerable debt reduction give management significant options.

Negatives:

  • Operating margins compressed.
  • Inventories increased due to higher acquisition costs with the company noting nut prices are generally higher.
  • Inability to pass on increased nut costs remains a risk to second half results.

JBSS remains our top pick with a price target of $44 per share and an attractive portfolio addition given historical low correlation.

Stock

Catalysts

Looking forward to tomorrow's earnings call and we'll update our valuation model early next week.

Disclosure: I am long JBSS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.