Back to top

Analyst Blog

Zacks Investment Research downgraded Penford Corporation (PENX - Snapshot Report) to a Zacks Rank #5 (Strong Sell) on Feb 8, 2014.

Why the Downgrade?

Penford Corporation reported disappointing financial results for the fiscal first quarter of 2014 (ended Nov 30, 2013) on Jan 9, 2014. Since then the company’s share price has plunged 15%.

A brief snapshot of Penford’s financial results has been provided below.

Earnings per share in the quarter were 4 cents, way below 14 cents earned in the year-ago quarter. Sales declined by 7.4% primarily due to an 11% fall in the company’s Industrial Ingredients revenue, offset partially by a 3.6% increase in Food Ingredients revenue.

Despite the 6% decline in cost of sales, lower revenues pulled down gross profit by 19%. Gross margin in the quarter was 9.8%, down 140 basis points year over year while operating margin was 1.4%, down 190 basis points year over year.

Weak fiscal first quarter 2014 results as well as a negative average earnings surprise of 83.8% make us pessimistic of fiscal second quarter 2014 results. Also, in the last 30 days, the Zacks Consensus Estimate for Penford has decreased by 13.3% to 65 cents for fiscal 2014 (ending Aug 2014) and by 5% to 95 cents for fiscal 2015.

Other Stocks to Consider

Penford Corporation is a $139 million company operating in the specialty chemicals industry. Some better-ranked stocks in the industry include International Flavors & Fragrances Inc. (IFF - Analyst Report), NewMarket Corp. (NEU - Snapshot Report) and Sensient Technologies Corp. (SXT - Snapshot Report). All these companies hold a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
CHINA BIOLO… CBPO 47.40 +2.20%
SOUTHWEST A… LUV 31.88 +2.05%
MALLINCKROD… MNK 72.34 +2.00%
PLANAR SYST… PLNR 4.30 +1.78%
GILEAD SCIE… GILD 103.97 +1.66%