Why Smart Balance's Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of specialty-food producer Smart Balance (Nasdaq: SMBL  ) were looking tasty to investors today, as they boosted shares 12% after the company reported second-quarter results.

So what: It wasn't the second quarter that investors were worked up about at Smart Balance. Sales did manage to rise 29% from last year to $76 million, but that was still a bit short of analysts' expectations. Earnings per share (on an adjusted basis) fell to $0.05 from $0.07 last year, though they were in line with Wall Street's estimates.

The outlook, however, was another story. Looking ahead, the company said it now expects sales of between $360 million and $370 million for all of 2012, which is a substantial boost over its previous forecast and ahead of the $329 million Wall Street expected. For 2013, Smart Balance's management is looking for $440 million to $450 million in revenue, which is well beyond the current $350 million expectation from analysts.

Now what: As far as stocks go, the promise for Smart Balance is very much an "on the come" bet -- growth has been strong, but with investors valuing the company at around 40 times expected 2012 earnings, growth will have to continue to be strong to create a compelling return. Certainly, the company's 2012 forecast suggests that it's currently delivering that growth -- at the midpoint of the forecast range, the company would show 33% top-line growth for the full year.

Want to keep up to date on Smart Balance? Add it to your Watchlist.

Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer has no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter, @KoppTheFool, or on Facebook. The Fool’s disclosure policy prefers dividends over a sharp stick in the eye.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1970534, ~/Articles/ArticleHandler.aspx, 10/21/2014 11:39:51 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement