Food makers slim down, focus on growth

Article Excerpt

These three food companies continue to cut their costs. They’re using the savings to make acquisitions and invest in new plants and equipment. These moves should spur their long-term earnings growth. However, we only see one of the three as a buy right now. SAPUTO INC. $47 (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 195.3 million; Market cap: $9.2 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.0%; TSINetwork Rating: Average; www.saputo.com) is Canada’s largest producer of dairy products, including milk, butter and cheese. It also makes snack cakes and tarts. In addition to Canada, Saputo operates in the U.S. and Argentina. In its fiscal 2014 first quarter, which ended June 30, 2013, Saputo earned $136.7 million, up 12.3% from $121.8 million a year earlier. Earnings per share rose 15.0%, to $0.69 from $0.60, on fewer shares outstanding. Sales gained 28.0%, to $2.2 billion from $1.7 billion. These gains are mainly due to Morningstar Foods, which Saputo bought for…

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