With a notable daily gain of 16.37% and a three-month gain of 14.73%, J&J Snack Foods Corp (JJSF, Financial) captures the attention of many investors. Coupled with an Earnings Per Share (EPS) of 4.44, the question arises: is J&J Snack Foods fairly valued at its current market price? This analysis delves into the GF Value to uncover whether J&J Snack Foods stands as an attractive investment opportunity.
Company Overview
J&J Snack Foods Corp manufactures and distributes snack foods and beverages across food service and retail supermarket outlets. Its diverse product range includes frozen beverages, juice, fruit bars, sorbet, cakes, and cookies. The company operates through three main segments: food service, retail supermarkets, and frozen beverages, with brands like Icee and Slush Puppie under its belt. J&J Snack Foods is currently priced at $160.47 per share, with a GF Value estimated at $174.68, suggesting a fair valuation.
Understanding GF Value
The GF Value is a proprietary measure calculated based on historical trading multiples, a GuruFocus adjustment factor from past performance and growth, and future business performance estimates. For J&J Snack Foods, the GF Value suggests the stock is fairly priced around $174.68, offering a balanced investment outlook. If the price significantly exceeds this value, it may indicate an overvaluation, whereas prices well below may signal undervaluation.
Financial Strength and Stability
Financial strength is critical in assessing a company's risk of capital loss. J&J Snack Foods, with a financial strength rating of 8 out of 10, shows robustness, partly due to its cash-to-debt ratio of 0.34. This figure, however, places it below 58.68% of its industry peers, indicating some areas of potential concern.
Profitability and Growth Prospects
J&J Snack Foods has shown consistent profitability, with a 10-year positive track record. The company's operating margin stands at 7.17%, ranking it above 61.66% of its industry counterparts. Additionally, its 3-year average annual revenue growth rate of 14.5% and EBITDA growth rate of 32.3% underscore its potential for sustained growth and shareholder value creation.
ROIC vs. WACC: A Measure of Value Creation
Comparing the Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC) provides insight into value creation. J&J Snack Foods has an ROIC of 7.59, surpassing its WACC of 6.34, indicating effective management and profitable investment returns.
Conclusion
In conclusion, J&J Snack Foods (JJSF, Financial) appears to be fairly valued, combining financial stability with strong profitability and promising growth prospects. For investors seeking further insights or considering other high-quality investment opportunities, exploring the GuruFocus High Quality Low Capex Screener may reveal additional attractive options.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
