The Earnings for Armanino Foods of Distinction

This morning saw the release of the earnings for Armanino Foods of Distinction (symbol AMNF on the pink sheets). It was a blowout quarter and a great report looking forward. There were record sales of $7,097,885. Net earnings were also a record and the earnings per share came in at 2.5 cents. This EPS report is just over 19% higher than the company's previous record for a quarter. In short, it was a great quarter.

The outlook going forward was also address in the report. The report quotes Edmond J. Pera, President and CEO as saying “International sales in the second quarter were especially strong contributing to the sales increase. We expect our margins to remain healthy for the remainder of this year thanks to raw materials pricing contracts that we have in place through the end of 2012. As usual, we will closely monitor the outlook of our material costs so that we can manage our margins appropriately. We currently do not have any plans to raise our selling prices and plan to use this pricing strategy to try and increase our market share. We continue to see a greater consumer awareness of pesto sauces in the market place which in our opinion could lead to overall market expansion. We believe that our current strategies are working well toward helping us achieve our overall objectives.”

Commodity prices had fallen during the second quarter, so the good margins during that time are no surprise. Since the beginning of July, however, commodity prices have been rising rapidly due to the ongoing drought in much of the country. If Armanino has locked in its cost of ingredients for the rest of 2012, the third and fourth quarter should also bring stellar results.

Even the report of strong international sales if important. We will have to await the full financials to be filed in a few weeks to see just how good these sale were. Any successful increase in the geographic footprint of the company is great news, however.

The market is responding well to the report. In the half hour after the report was released, the company's stock traded nearly three times the average volume for the previous ten days and the price rose by about 2%.

Today's report makes it more likely that in September we will see another increase in the dividend paid on Armanino stock. At the present price of 83 cents, the current dividend yield is 5.8%. If the stock hits the target price of $1.00 it will still yield 4.8% prior to any upcoming increases.

Now is the time to buy Armanino stock. It takes a day or two for the news on this company to get fully disseminated. As of now, the stock is a great bargain in my opinion.

UPDATE: As of 2:30 pm, the volume of trading has passed 100,000 shares. This is a level that Armanino hits only a few times per year.

DISCLOSURE: I am long Armanino stock. It is one of the largest holdings in the accounts I manage.