Some folks have been cheating on their low-carb diets. According to my calculations, 98% of Americans are on some variation of the Atkins diet (margin of error is 98%). Yet despite this fact (fiction), Tasty Baking
While companies such as competitor Interstate Bakeries
In spite of this, the company reported gross sales of $68.4 million. Route sales (defined in the firm's annual report as "owned by independent sales distributors who purchased the exclusive right to sell and distribute Tastykake products in defined geographical territories") make up the majority of the company's sales, and they were up 12.2% from one year ago. This, however, is due in large part to an increase in the pricing of the products. Net sales actually decreased slightly 1.2% from a year ago, but margins increased by 3.4%. The company's decision to increase its route-sales business segment partially explains the improved margins, with increased prices explaining the rest.
I like that the company is focused on improving margins and profits, but I'm still not convinced that it has significant upside potential. Yesterday's 6% stock price increase to $9.50 seems to indicate that I'm in the minority.
The company is projecting full-year earnings of $0.20 per share, compared to estimates of $0.16. Even if it is able to meet its goal, the forward P/E is still a fat 47.5. That's a pretty sweet price for the maker of Krimpets and Kandy Kakes.
Are you set on avoiding Krimpets and embracing a low-carb lifestyle? Check out our Low Carb Way of Life discussion board for tips and support.
Fool contributor Mike Cianciolo welcomes feedback and doesn't own any of the companies in this article.