Pinnacle Foods Rides High On Strong Portfolio & Acquisitions

Pinnacle Foods Inc. (NYSE:PF) has a strong portfolio of brands. Also, this Zacks Rank #2 (Buy) company has been carrying out various acquisitions to expand its distribution network and customer base and boost long-term growth.

The company actively manages a diverse portfolio of iconic food brands that enjoy strong household penetration in the United States. In fact, its products can be found in over 85% of U.S. households and its brands are leaders in their respective categories. Pinnacle Foods has also been undertaking innovation to maintain market share.

For 2018, management plans to roll out products under the Birds Eye brand and will also expand its Hungry-Man Handful line. Moreover, encouraged by the popularity of Perfect Size for 1, the company will be launching a variety of products and strengthening the Duncan Hines product line. Management is also planning to improvise the gardein and Evol brands.

Acquisitions have been one of the prime catalysts boosting revenues. The buyout of Boulder Brands, completed in January 2016, gave Pinnacle Foods a new growth platform for refrigerated foods. The Boulder Brands acquisition added the Udi's, Glutino, Smart Balance, Earth Balance and EVOL brands to the company's portfolio as well as complementary foodservice, private label and Canadian businesses.

In 2017, the company gained synergies of $16 million from the Boulder takeover. Further, management expects to benefit from the residual synergies associated with this acquisition. Moreover, during December 2017, the company carried out the acquisition of Beaver Dam food facility in an effort to expand its Birds Eye line.

We are encouraged to note that the company has an operational excellence program in place designed to generate annual productivity savings across the supply chain. On account of such efforts combined with acquisition synergies and benefits from the network optimization program, the company expects productivity for 2018 in the range of 4-4.5% of cost of products sold.

Management expects 2018 adjusted earnings per share in the range of $2.85-$2.95. Considering the guidance mid-point, earnings represent growth of 16% from 2017’s 52-week adjusted earnings of $2.50.

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