Wrigley Hasn't Lost Its Flavor

It doesn't seem to happen very often, but confectioner Wrigley (NYSE:WWY) delivered a slightly disappointing quarter to investors today. The stock dipped about 2.5% in recent trading, which is neither here nor there for a stock that has nearly always been sweet for investors.

Third-quarter earnings at Wrigley increased 3% for the quarter, to $129.7 million or $0.57 per diluted share. That includes a $0.02-per-share restructuring charge related to a realignment of Wrigley's supply chain. On the other hand, favorable currency exchange rates boosted earnings. Sales increased 16% to $1.1 billion on volume gains of 20%.

If you've been following Wrigley, you know that it recently acquired the top-notch Altoids and Life Savers brands from Motley Fool Income Investor pick Kraft (NYSE:KFT). The company said the acquisition had a slightly dilutive effect on its earnings, although Wrigley also said that its new brands contributed two-thirds of the volume gain in the quarter.

Meanwhile, gross margins did flag a bit, down 170 basis points to 53.7%, which the company attributed partly to the impact of its new brands and the restructuring charge noted above.

Many Fools have sung Wrigley's considerable praises, especially its historical tendency to deliver to investors. At least one Fool has long considered Wrigley a stock he'd love to own.

However, there's also the interesting aside that my Foolish colleague Nate Parmelee pointed out during the summer -- when Wrigley reports its quarterly earnings, it only provides its income statement in its press release, saving the other financial statements for later SEC filings -- if you felt like information about Wrigley at the moment was sparse, you're certainly not imagining things.

Wrigley may have missed analysts' expectations by a penny and reported rather lackluster earnings, but the market barely blinked. A 2.5% decrease in share price hardly constitutes a bargain for investors who've been waiting for the confectionary king to take a bigger stumble before buying shares. After all, Wrigley still trades at about 29 times trailing-12-month earnings, which, when taken with an estimated 11% long-term growth rate, hardly puts it in the bargain range.

Wrigley is traditionally a stalwart stock, given its portfolio of well-branded products that consumers buy again and again. If Wrigley lost a little bit of flavor today, it was nominal and quite likely temporary -- there's always another stick of gum in the pack.

Further Foolishness to chew on:

• Why Wrigley's a stock one Fool would love to own.
• Several months ago, Wrigley got sweeter.
• The springtime was not the time to spit out the Wrigley.

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Alyce Lomax does not own shares of any of the companies mentioned.