Ruddick Corp. (RDK) has been trending higher for most of the last 14 months after bottoming out in March of 2009 with the market. Although shares have recently pulled back a bit, the long-term trend is still bullish on the company's 23% Q2 earnings surprise from late April and rising estimates.
Ruddick Corp., through its subsidiaries, operates a regional chain of supermarkets in the southeastern and mid-Atlantic United States. The company was founded in 1891, operates 189 grocery stores and has a market cap of $1.58 billion.
Ruddick doesn't look like the usual high-flyer stock covered in momentum, operating in a more mature segment of the market. But that looks like a feather in the company's hat right now, providing a very nice combination of growth and stability as other stocks crash on market weakness. The company has grown its earnings in each of the last four quarters, recently on display with better than expected Q2 results from late April that included a 22% earnings surprise.
Second-Quarter Earnings Surprise of 23%
Revenue for the period was up 6% to $1.07 billion. Earnings also came in strong at 60 cents, 22% ahead of the Zacks Consensus Estimate. The company now has an average earnings surprise of 10% over the last four quarters.
Ruddick's largest segment, the Harris Teeter grocery stores, saw sales increase 5.4% to $1 billion, driving a 4.6% increase in operating profit to $47 million. The company saw its biggest sales gains in its American Efird segment (sewing threads and textiles), where sales were up 17% to $71 million on its growing presence in Asian markets, accounting for 54% of total sales.
Ruddick moved to strengthen its balance sheet during the quarter, with its cash position holding steady at $37 million while its total debt fell by more than $50 million to $343 million.
With the company showcasing some solid upward momentum during the quarter, analysts went ahead and raised estimates. The current year is up 11 cents in the last month to $2.11 while the next-year estimate is up 19 cents to $2.34, an 11% growth projection.
In spite of the recent gains, shares of RDK still have some value, trading with a forward P/E multiple of 15X, a discount to its peer's 17X. Its P/B multiple of 1.86X is in line with its peer average.
Shares of RDK recently pulled back from the new 52-week high as the market weakened, but the long-term trend is still bullish, take a look at the chart below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service.