J & J's Earnings Treat

Snack specialist J & J Snack Foods (Nasdaq: JJSF  ) has been a steady performer over the past five years. Products such as Minute Maid juice bars, ICEE frozen beverages, and SuperPretzels have helped the company's stock serve up a 280% treat over that time period. A review of J&J's fourth-quarter earnings report, released Monday morning, suggests the good times haven't melted yet.

Fourth-quarter revenues increased 6% year over year, while full-year FY 2005 sales were higher by 9.7%. This may seem dull if you're used to supercharged high-growth stocks such as those recommended by the Motley Fool Rule Breakers newsletter. But J & J's growth is comparable to fellow food company Del Monte Foods (NYSE: DLM  ) , which served up a 7% revenue increase in its latest quarter.

The bulk of its full-year revenues came from its Food Service division, which provided more than 61% of company revenues. This unit was also its fastest grower over the past year, increasing by 12%. However, excluding the growth resulting from the acquisitions of Country Home Bakers and Snackworks, organic growth in this segment was only 4%, compared with 9% organic growth in the retail supermarket segment. The restaurant division was the big loser, with revenues down 29%, primarily because 11 of its pretzel stores were either shut down or licensed to somebody else.

The company also pointed toward its frozen treats as a source of strength. Warm weather over the past three months provided a reason for supermarket customers to stack up on LUIGI'S Real Italian Ice, which saw red-hot 50% sales growth.

Fortunately, J & J's profitability didn't cool off either. Despite the challenges of higher energy costs, operating margins actually improved to 11.8% from 11.2%. This places the company on a higher profitability level than fellow food purveyor JM Smucker (NYSE: SJM  ) , which achieved operating margins of only 9.7% in its latest quarter.

The combination of steady top-line growth and improving margins helped J & J increase fourth-quarter earnings per diluted share by 10.4%, to $1.06. With trailing 12-month EPS of $2.80, the company currently trades at a P/E around 20.5. This is no bargain, but it may be a reasonable price to pay for a consistent performer.

Further food-ish Foolishness:

• The Muck in Smucker
• Where's the Spice, McCormick?
• Dull Del Monte

Fool contributor Jeremy MacNealy does not own shares of any companies mentioned.