The Fresh Market Earnings: Double-Digit Revenue Growth Didn’t Excite Investors

The Fresh Market Inc. (NASDAQ:TFM) reported higher profit for the second quarter as revenue showed growth. Fresh Market is a specialty food retailer. The company operates a chain of stores that retail fresh premium perishable food items. Fresh Market operates in the southeastern, midwestern and mid-Atlantic states.

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The Fresh Market Inc. Earnings Cheat Sheet

Results: Net income for The Fresh Market Inc. rose to $13.3 million (28 cents per share) vs. $10.5 million (22 cents per share) in the same quarter a year earlier. This marks a rise of 26.9% from the year-earlier quarter.

Revenue: Rose 20.6% to $313 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: The Fresh Market Inc. beat the mean analyst estimate of 27 cents per share. Analysts were expecting revenue of $310.3 million.

Quoting Management: “We are extremely pleased with our strong second quarter performance for both sales and earnings growth,” said Craig Carlock, President and Chief Executive Officer. “Our comparable store sales grew 8.0% in the second quarter, led by customer transactions and continuing the sales momentum we’ve seen over the past several quarters. Additionally, during the quarter we opened five new stores, we made significant progress on our California expansion plans and, despite incremental public company expenses, transactions costs due to our public offering and legal settlement costs incurred during the quarter, we were able to increase our operating margin to 6.9%. We continue to be extremely enthusiastic about the consistency of our business and are therefore raising our fiscal 2012 guidance to reflect not only the strong first half performance but our continued confidence in our second half growth prospects. We now believe that fiscal 2012 comparable sales growth will be 5.5% to 6.5% and that our earnings per share will be between $1.33 and $1.38, including the absorption of equity offering transaction expenses and incremental legal costs incurred this quarter.”

Key Stats:

For the past five quarters, the company has seen double-digit year-over-year percentage revenue growth. Over that span, the company has averaged growth of 15.9%, with the biggest boost coming in the first quarter when revenue rose 22.8% from the year earlier quarter.

The company has beaten estiamtes for two quarters in a row. In the first quarter, it topped expectations with net income of 40 cents versus a mean estimate of net income of 35 cents per share.

Looking Forward: Next quarter’s results are expected to be more favorable for the company. Over the past sixty days, the average estimate for the third quarter has reached 24 cents per share, up from 23 cents. The average estimate for the fiscal year is $1.35 per share, a rise from $1.30 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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