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 Diamond Foods, (NASDAQ:DMND) were looking tasty to investors today, increasing as much as 11% after the company reported second-quarter earnings last night.
So what: The maker of Kettle Chips and other snack foods posted an adjusted profit of $0.09 a share, $0.01 better than estimates, and up from $0.05 a year ago, while revenue was essentially flat, at $220.6 million. That figure still beat the consensus at $216.8 million, however. The 10.8% growth in Snacks sales was offset by a 10.1% decline in Nuts sales, though the change in product mix helped send gross margin up 250 basis points, to 25.4%. CEO Brian Driscoll said he expected further headwinds in the Nuts segment in the second half of the year, but was confident the company's multi-year turnaround strategy is on track.
Now what: In its outlook for the remainder of the year, management only said it expects to deliver an increase in adjusted EBITDA despite higher tree nut costs. In the previous quarter, adjusted EBITDA increased 24%. The improvement in Snacks sales is certainly a bright sign for Diamond, and the company seems to be making progress in its turnaround after it was badly damaged by an accounting scandal in 2011. Shares have more than doubled in the past year, and should keep moving higher if the company comes through on its EBITDA guidance.
Why mess with success?
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.
Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.