Snack specialist J & J Snack Foods
Fourth-quarter revenues increased 6% year over year, while full-year FY 2005 sales were higher by 9.7%. This may seem dull if you're used to supercharged high-growth stocks such as those recommended by the Motley Fool Rule Breakers newsletter. But J & J's growth is comparable to fellow food company Del Monte Foods
The bulk of its full-year revenues came from its Food Service division, which provided more than 61% of company revenues. This unit was also its fastest grower over the past year, increasing by 12%. However, excluding the growth resulting from the acquisitions of Country Home Bakers and Snackworks, organic growth in this segment was only 4%, compared with 9% organic growth in the retail supermarket segment. The restaurant division was the big loser, with revenues down 29%, primarily because 11 of its pretzel stores were either shut down or licensed to somebody else.
The company also pointed toward its frozen treats as a source of strength. Warm weather over the past three months provided a reason for supermarket customers to stack up on LUIGI'S Real Italian Ice, which saw red-hot 50% sales growth.
Fortunately, J & J's profitability didn't cool off either. Despite the challenges of higher energy costs, operating margins actually improved to 11.8% from 11.2%. This places the company on a higher profitability level than fellow food purveyor JM Smucker
The combination of steady top-line growth and improving margins helped J & J increase fourth-quarter earnings per diluted share by 10.4%, to $1.06. With trailing 12-month EPS of $2.80, the company currently trades at a P/E around 20.5. This is no bargain, but it may be a reasonable price to pay for a consistent performer.
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Fool contributor Jeremy MacNealy does not own shares of any companies mentioned.
