Back to top

Analyst Blog

Zacks Equity Research

Pinnacle Foods Aims at Strategic Growth: Hold the Stock

PF KHC BETR APFH

Trades from $3

With a motive to expand its distribution network and customer base, with persistent focus on innovation and strategic acquisitions, backed by a strong portfolio of brands, Pinnacle Foods Inc. (PF - Free Report) remains confident of boosting its long-term growth. Also, the company witnessed over 17% hike in its stock price year to date.

PINNACLE FOODS Price and Consensus

PINNACLE FOODS Price and Consensus | PINNACLE FOODS Quote

Driving Factors

A leading manufacturer, marketer and distributor of branded food products, Pinnacle Foods actively manages its diverse portfolio of iconic food brands that enjoy strong household penetration in the U.S. Notably, the company’s products can be found in over 85% of U.S. households and its brands are leaders in their respective categories, holding the #1 or #2 market position.

The company has undertaken several initiatives to reduce costs, coupled with strategic acquisitions to further expand its footprint. Some popular innovations include new varieties of the Duncan Hines perfect size baking kits, Birds Eye Chef’s Favorites lines, Birds Eye Voila! family size complete bagged meals and the Hungry-Man Selects line. Recently, it included three new varieties, namely Key Lime Pie, Chocolate Dream Pie, and Cheesecake in the Perfect Size platform.

Additionally, Pinnacle Foods acquired Boulder Brands, Inc. in order to meet changing consumer tastes toward healthier offerings. Also, the company obtained a new growth platform for refrigerated foods, and is expected to benefit in areas of procurement, manufacturing, and logistics.

Further, Pinnacle Foods has an operational excellence program in place, designed to generate annual productivity savings across the supply chain. The company is also pursuing other initiatives, like improving its product mix through innovations to boost its gross margin. Alongside, it has been regularly rewarding shareholders through dividends.

Hurdles

Despite these growth strategies, Pinnacle Foods remains apprehensive of incurring higher introductory costs related to product innovation. Moreover, increased consumer marketing investment and currency headwinds are likely to hurt profits.

Nonetheless, estimates have largely remained unchanged ahead of Pinnacle Foods' third-quarter 2016 earnings release.

Given the pros and cons embedded in the stock, Pinnacle Foods currently has a Zacks Rank #3 (Hold).

Stocks that Warrant a Look

Some better-ranked stocks in the food industry include The Kraft Heinz Company (KHC - Free Report) , AdvancePierre Foods Holdings, Inc. (APFH - Free Report) and Amplify Snack Brands, Inc. (BETR - Free Report) .

Kraft Heinz, with a long-term earnings growth rate of 19.5%, has gained nearly 22% year to date. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AdvancePierre Foods, a Zacks Rank #2 (Buy) stock, has a long-term earnings growth rate of 20.6%. The stock has gained roughly 16% year to date.

Amplify Snack Brands, with a Zacks Rank #2, has jumped over 31% year to date. The stock has a long-term earnings growth rate of 21.7%.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>


In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

PINNACLE FOODS (PF) - free report >>

KRAFT HEINZ CO (KHC) - free report >>

AMPLIFY SNACK (BETR) - free report >>

ADVANCEPIERR FD (APFH) - free report >>