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What: Shares of J&J Snack Foods
So what: To say that investors are taking a bite out of the stock today would be an understatement. For the quarter, J&J reported a sales increase of 11% to $172.7 million and a profit of $0.29. Unfortunately for shareholders, this fell $0.11 shy of Wall Street's consensus EPS estimates, but was more or less in line with sales estimates. Gerald Schreiber, CEO of J&J, noted that while the company's ICEE business was strong, nearly all other brand names showed weakness. He blamed volume weakness, an inability to pass raw material increases along to consumers, and other expenses increasing as the reasons for the earnings shortfall.
Now what: Hearing from a food producer that raw material costs are rising really isn't anything new. What is disturbing is the volume weakness across the vast majority of its brand portfolio. This quarter marked the third time in the past year that J&J has failed to live up to Wall Street's expectations, and its earnings report sounded anything but confident about its being able to resolve its current issues. My advice would be to dump J&J and its 1% dividend yield for a much larger food product portfolio like Kellogg
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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.