Diamond Foods profit tops views, stock jumps

Diamond Foods Inc.'s shares jumped on Thursday after the company beat Wall Street expectations with its third-quarter earnings and raised its outlook for the year.

Diamond Foods shares gained 11.9 percent, or $3.04, to $28.73 in afternoon trading.

The snack maker said late Wednesday that its profit in the three months ended April 30 totaled $2.7 million, or 16 cents per share, up 144 percent from $1.1 million, or 7 cents per share, in the same quarter last year.

Sales in its third quarter grew 11 percent to $111 million from $100 million.

Analysts polled by Thomson Reuters had expected profit of 14 cents per share on sales of $104 million.

The San Francisco-based company also lifted the bottom end of its sales guidance for fiscal 2009 and boosted operating profit guidance for the year ending July 31 to between $1.31 and $1.36 per share from $1.27 to $1.34 per share.

"The company continues to invest higher gross profit dollars back into the business to fuel future growth," wrote KeyBanc Capital Markets analyst Akshay Jagdale in a note to investors on Thursday.

Diamond Foods said it was raising its expenses allotment for advertising.

Craig Hallum Capital analyst Mark Argento said the company was funneling gains from lower input costs into promotions and advertising to build its Emerald nut brand.

Sales in diamond Foods' snack segment, which includes Emerald and Pop Secret popcorn, shot up 108 percent year over year, and Emerald hit a market share record of 7.4 percent, the company said.

Gross profit margins rose to 24.9 percent from 17.3 percent last year, due to a shift toward the higher-margin snack segment as sales of less-profitable in-shell nut and ingredients declined, Argento said.

He raised his price target on the stock to $34.