Landec Earnings: Here’s Why Investors are Not Happy Now

Landec Corp. (NASDAQ:LNDC) delivered a profit and beat Wall Street’s expectations, AND beat the revenue expectation. The revenue beat is a positive sign to shareholders seeking high growth out of the company. Shares are down 7.42%.

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Landec Corp. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share were the same at $0.18 in the quarter as EPS of $0.18 in the year-earlier quarter.

Revenue: Rose 47.26% to $117.9 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Landec Corp. reported adjusted EPS income of $0.18 per share. By that measure, the company beat the mean analyst estimate of $0.17. It beat the average revenue estimate of $109.51 million.

Quoting Management: Gary Steele, Landec’s Chairman and CEO, commented, “We had a good third quarter despite the significant weather-related produce sourcing issues in California which reduced gross profit for Apio by $3.0 million. For the quarter we achieved revenue growth of 47% and flat net income growth compared to the third quarter of last year. For the first nine months of fiscal year 2013, revenues grew 42% and net income grew 43%, before including the $3.9 million non-recurring earn-out adjustment recorded during the second quarter of fiscal year 2013. The third quarter and first nine months of fiscal year 2013 operating highlights include: (1) growing Lifecore’s revenues 57% and 20%, respectively, and its net income by 98% and 16%, respectively, (2) increasing revenues in our non-green bean Apio food business by 8% and 12%, respectively, despite produce sourcing issues in California during the third quarter, (3) increasing Apio’s export revenues by 8% and 15%, respectively, while increasing margins, (4) exceeding GreenLine’s earnings expectations for the quarter and first nine months of fiscal year 2013, (5) launching a family of new superfood products with significant initial nationwide demand, and (6) benefiting from our partner Windset advancing its construction of an additional 64 acres of hydroponic greenhouses in Santa Maria, California which is scheduled to be completed later this calendar year and which will double Windset’s capacity in California to six million square feet of greenhouse operations. In spite of some produce sourcing issues, we had a good third quarter and for all of fiscal year 2013 we are on track to achieve the best operating results in Landec’s history.”

Key Stats (on next page)…

Revenue increased 2.83% from $114.65 million in the previous quarter. EPS decreased 47.06% from $0.34 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.20 to a profit $0.17. For the current year, the average estimate has moved up from a profit of $0.65 to a profit of $0.84 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)