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Why Shares of Omega Protein Corporation Jumped

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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 Omega Protein Corporation  (NYSE: OME  ) were looking stronger today, gaining as much as 21% after reporting fourth-quarter earnings this morning.

So what: The maker of Omega-3 fish oils and specialty protein products said revenues increased 4% to $66 million, missing expectations at $69.5 million, though earnings per share soared from $0.20 a year ago to $0.66, cruising past estimates at $0.32. The surge in profits came as gross margin jumped from 20.5% to 42.4% due to "an increase in fish oil and fish meal sales prices and greater-than-anticipated fish catch in the fourth quarter," which lowered costs and boosted margins in the animal nutrition segment to 47.1% .  

Now what: The jump in animal nutrition gross margins was offset by a drop in the human nutrition segment from 24.9% to 13.6%, showing the volatility of Omega's business. Still, animal nutrition makes up over 80% of Omega's revenue so the price increases seem to bode well going forward. Omega did not release guidance, but the company has beaten earnings estimates easily in its past four quarters, and looks cheap based on its trailing valuation at a P/E under 8. Look for analysts to lift their estimates, which should give the stock another boost. 

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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Related Tickers

8/28/2015 4:02 PM
OME $16.92 Down -0.12 -0.70%
Omega Protein CAPS Rating: ***