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What: Shares of Annie's, Inc. (NYSE:BNNY) were getting overcooked today, falling as much as 11% after a disappointing third-quarter earnings report.
So what: The maker of organic food products said sales were up 21.7% to $46.2 million, beating estimates at $45.9 million, but higher costs meant adjusted earnings per share improved just 7.6% to $0.17, a penny short of the consensus. This was the third quarter in a row that Annie's missed estimates by a penny, and CEO John Foraker noted "tight supply conditions in the organic wheat market," but was also upbeat about "accelerating momentum in consumption."
Now what: What really seemed to send shares falling was the company's reduced guidance, as it now sees full-year EPS of just $0.92-$0.93, below estimates at $0.97 and a previous range of $0.97-$1.01. For a high-priced growth stock like Annie's, dropping guidance is likely to cause a sell-off, so investors shouldn't be surprised by today's reaction. Still, with top-line growth expected to hold near 20% and a well-respected brand with plenty of opportunity ahead of it, this could just be a speed bump on the road to a bright future for Annie's.
Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. 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. The Motley Fool has a disclosure policy.