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Momentum

The Pantry, Inc. (PTRY) has been surging higher for the last two months, recently hitting a new 52-week high on the heels of a solid 38% earnings surprise that saw the company return to profitability from last quarter. With a bullish next-year estimate calling for 23% growth, this Zacks #1 rank stock has momentum to boot.

Company Description

The Pantry, Inc. owns and operates a chain of more than 1,650 convenience stores and 230 quick service restaurants in the southeastern United States. The company was founded in 1967 and has a market cap of $538 million.

Shares of PTRY took a big jump on August 3 after the company reported excellent Q3 results that handily beat estimates.

Third-Quarter Results

Revenue for the period was up 16.5% from last year to $1.9 billion. Earnings also came in strong at 94 cents, 38% ahead of the Zacks Consensus Estimate.

The company's gains were led by its merchandise segment, where sales were 8.8% from last year and 7.7% on a same-store basis. The Pantry's fuel segment was a bit of a drag, where gasoline expenses were up $200 million from last year to $1.35 billion, helped partially by above average margin.

Effective Expense Management

The pantry also relied on managing its expenses to drive profits, where total operating and SG&A expenses were up only 3% on the nice 16.5% sales increase.

Estimates

Estimates were on the upswing into the good quarter, but have jumped even higher since, with the current year up 27 cents to $1.41. The next-year estimate has added 18 cents, climbing to $1.73, a bullish 23% growth projection.

Valuation

But in spite of the recent gains, the valuation picture is still in check, with share trading with a forward P/E of 17X compared to the industry average of 16X.

6-Month Chart

PTRY began moving higher into the Q3 earnings release but jumped higher after the actual results came in better than expected to hit a new 52-week high at $24.43. The MACD below the chart is bullish too, with the short-term average recently turning ahead of the long-term average. Look for support from the trend line and previous breakout area at $21 on any weakness, take a look below.

PTRY: The Pantry, Inc. >
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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.