Last Update 3/10/25
J&J Snack Foods isn’t a flashy name in the market, but if you’ve ever grabbed a SuperPretzel at a ballpark or a churro at an amusement park, you’ve already come across their products. This company has built its business in a stable and familiar space—snack foods and frozen beverages—serving food service providers, retailers, and entertainment venues.
It’s not trying to be the next PepsiCo or Nestlé, but it does have a stronghold in a niche market where consistency and brand recognition matter. For dividend investors, this is the kind of company that’s often appealing: a reliable business with steady cash flow and a long track record of returning money to shareholders.
So, what does J&J Snack Foods bring to the table for dividend investors? Let’s dig into the numbers and see if this stock is worth keeping in a dividend-focused portfolio.
Key Dividend Metrics
📌 Dividend Yield: 2.26% (Above its 5-year average of 1.73%)
📌 Annual Dividend Rate: $3.12 per share
📌 Payout Ratio: 69.82% (Moderately high but still manageable)
📌 Dividend Growth: Consistent increases, but at a slower pace recently
📌 Ex-Dividend Date: March 18, 2025
📌 Dividend Payment Date: April 8, 2025
The current dividend yield has ticked up above its historical average, making it slightly more attractive for income-focused investors. While not a high-yield stock, it has a history of steady payouts and gradual increases over time.
Dividend Overview
J&J Snack Foods has been a consistent dividend payer, which is a great sign for investors looking for stable income. The yield sits at 2.26%, a bit higher than its historical average of 1.73%. This suggests that the stock might be slightly undervalued or that earnings are under some pressure.
The company’s payout ratio stands at 69.82%, which is a little on the higher side. It’s not dangerously high, but it does mean that a significant portion of earnings is going toward dividends. If earnings growth remains sluggish, future dividend increases could be modest.
The company has a good track record of dividend growth, but it’s worth noting that in recent years, the pace of increases has slowed down. That could be a sign that management is being cautious, or it could reflect some underlying financial challenges.
Dividend Growth and Safety
J&J Snack Foods has built a solid reputation for returning cash to shareholders. The company has consistently raised its dividend over the years, but recent financial trends suggest that future growth might not be as aggressive as it once was.
What Makes the Dividend Safe?
✔️ Steady Cash Flow – Over the last year, the company generated $159.28 million in operating cash flow, providing a strong foundation for dividend payments.
✔️ Low Debt Load – With a debt-to-equity ratio of just 17.39%, the company isn’t overleveraged, reducing financial risks.
✔️ Healthy Balance Sheet – JJSF has $73.56 million in cash on hand, and a current ratio of 2.63, meaning it has enough liquidity to cover its short-term obligations.
That said, there is one major concern—earnings are trending in the wrong direction. Quarterly earnings dropped by 29.40% year-over-year. If this continues, the company could find itself in a position where maintaining dividend growth becomes more difficult.
Chart Analysis
Price Action and Moving Averages
J&J Snack Foods (JJSF) has been on a rollercoaster ride over the past year. The stock hit a peak above $180 but has since experienced a steady decline, falling below its 50-day and 200-day moving averages. Recently, there’s been an attempt to recover, with the stock climbing back toward the $140 level.
The 50-day moving average is still sloping downward, showing that short-term momentum remains weak, though the price is now testing this level from below. Meanwhile, the 200-day moving average is trending downward as well, signaling that the longer-term trend is still bearish. Until the stock can break back above these key levels and hold, the broader trend remains under pressure.
Volume and Market Participation
Volume has been elevated in certain periods, particularly in early February when the stock saw a large spike in selling. This suggests that there was a flush-out of weaker hands before the recent bounce. The last few sessions have seen a pickup in green volume bars, indicating some buying interest, but the overall volume trend remains mixed.
If JJSF is going to sustain this recovery, it will need to see follow-through buying with stronger volume levels. A move higher on weak volume would be less convincing and could lead to another leg down if buyers don’t step in.
Relative Strength Index (RSI)
The RSI indicator, located at the bottom of the chart, shows that the stock was in deeply oversold territory in February before making a strong move upward. The RSI has now climbed back toward the mid-level range, suggesting that some of the recent selling pressure has eased.
If the RSI continues to rise without the stock making a new high, it could indicate a short-term bounce rather than a full reversal. However, if it pushes toward the 70 level, that would suggest momentum is shifting back in favor of the bulls.
Support and Resistance Levels
The recent low around $120 appears to have acted as a key support level, as the stock bounced sharply from there. On the upside, the $140 level looks like a near-term resistance zone, as it’s right around where the 50-day moving average is sitting.
If JJSF can break above $140 and hold, it could open the door for a test of $150, where there was prior consolidation. If it fails to break through, another pullback could be on the table, with support likely coming in around the $130 area.
Chart Analysis
Price Action and Moving Averages
J&J Snack Foods (JJSF) has been on a rollercoaster ride over the past year. The stock hit a peak above $180 but has since experienced a steady decline, falling below its 50-day and 200-day moving averages. Recently, there’s been an attempt to recover, with the stock climbing back toward the $140 level.
The 50-day moving average is still sloping downward, showing that short-term momentum remains weak, though the price is now testing this level from below. Meanwhile, the 200-day moving average is trending downward as well, signaling that the longer-term trend is still bearish. Until the stock can break back above these key levels and hold, the broader trend remains under pressure.
Volume and Market Participation
Volume has been elevated in certain periods, particularly in early February when the stock saw a large spike in selling. This suggests that there was a flush-out of weaker hands before the recent bounce. The last few sessions have seen a pickup in green volume bars, indicating some buying interest, but the overall volume trend remains mixed.
If JJSF is going to sustain this recovery, it will need to see follow-through buying with stronger volume levels. A move higher on weak volume would be less convincing and could lead to another leg down if buyers don’t step in.
Relative Strength Index (RSI)
The RSI indicator, located at the bottom of the chart, shows that the stock was in deeply oversold territory in February before making a strong move upward. The RSI has now climbed back toward the mid-level range, suggesting that some of the recent selling pressure has eased.
If the RSI continues to rise without the stock making a new high, it could indicate a short-term bounce rather than a full reversal. However, if it pushes toward the 70 level, that would suggest momentum is shifting back in favor of the bulls.
Support and Resistance Levels
The recent low around $120 appears to have acted as a key support level, as the stock bounced sharply from there. On the upside, the $140 level looks like a near-term resistance zone, as it’s right around where the 50-day moving average is sitting.
If JJSF can break above $140 and hold, it could open the door for a test of $150, where there was prior consolidation. If it fails to break through, another pullback could be on the table, with support likely coming in around the $130 area.
Analyst Ratings
📈 Upgrade: Benchmark has maintained a buy rating on JJSF, setting a price target of $200. This suggests confidence in the company’s long-term growth potential. Analysts who remain bullish on the stock point to its stable revenue stream, improving cost management, and strong brand recognition in the snack food industry. Recent price stabilization and a potential recovery in margins may also be factors contributing to this optimistic stance.
📉 Downgrade: On the other side, Jefferies Financial Group has taken a more cautious approach, downgrading JJSF to a hold and reducing its price target to $135. This reflects concerns about lingering cost pressures, a decline in recent earnings, and the potential for weaker consumer demand in certain segments. Analysts at Jefferies believe the stock’s recent rebound may be limited unless the company can demonstrate stronger profit growth and improve operating efficiency.
🎯 Consensus Price Target: The average analyst price target for JJSF currently stands at $161.50, indicating a potential upside from current levels. While the stock has faced headwinds, there is still an expectation among analysts that it can recover to more reasonable valuation levels over time.
These mixed ratings highlight the divide between those who see JJSF as a long-term growth play versus those who believe near-term risks could limit gains. Investors weighing their options should consider both perspectives, especially in light of recent earnings trends and broader market conditions.
Earnings Report Summary
J&J Snack Foods kicked off the first quarter of fiscal 2025 with a solid revenue increase, bringing in $348.3 million, up 4.1% from the same time last year. While sales are trending in the right direction, profitability took a hit as rising costs weighed on margins.
Earnings per share came in at $0.33, down from $0.52 in the previous year’s quarter. The main culprit? Higher input costs and operational expenses, which squeezed gross margins and put pressure on overall earnings. It’s a familiar story across the food industry—costs are up, and companies are trying to balance price increases without losing customers.
Management didn’t shy away from addressing these challenges in the earnings call. They acknowledged that higher costs are a headwind, but they’re focused on supply chain efficiencies and potential pricing adjustments to offset some of the pressure. They also emphasized their commitment to long-term growth and making strategic moves to keep profitability on track.
Despite the earnings dip, the company’s financial position remains strong. Cash flow is stable, and JJSF has the liquidity needed to weather short-term challenges while continuing to invest in growth.
Overall, the quarter was a mix of good and bad news. Sales growth shows that demand for JJSF’s snack products is holding up, but rising costs are cutting into profits. The company is taking steps to manage these challenges, but investors will want to keep an eye on future earnings to see how well these strategies play out.
Financial Health and Stability
The company operates in a stable industry with strong brand recognition, but its recent financial performance has been a bit mixed.
- Revenue grew by 4.1% year-over-year, which shows that demand for its products remains steady.
- The profit margin is 5.31%, which isn’t particularly high for a food company. Rising costs have put pressure on margins.
- Return on equity sits at 9.08%, indicating that the company is using its capital efficiently, but it’s not an especially high number.
- Total debt stands at $164.64 million, but with a debt-to-equity ratio of just 17.39%, JJSF has a conservative financial structure.
While the company’s balance sheet remains strong, margin compression is something to keep an eye on. If costs continue to rise faster than sales, profitability could take a further hit.
Valuation and Stock Performance
JJSF is currently trading at $139.42, which is well below its 52-week high of $180.80 but still above its 52-week low of $116.60. The stock has pulled back from its peak, making it more attractive from a valuation standpoint, but there are a few things to consider.
- The price-to-earnings (P/E) ratio is 31.86, which is relatively high for a company with declining earnings.
- The price-to-sales ratio sits at 1.70, lower than its historical average, suggesting that the stock might be trading at a discount compared to previous levels.
- Enterprise value to EBITDA is 14.73, which is reasonable for a company with steady cash flow.
While the stock is cheaper than it was at its highs, the elevated P/E ratio indicates that investors still have fairly high expectations for future growth. If earnings don’t rebound, the stock could see more downside.
Risks and Considerations
🔸 Margin Pressures – The company’s operating margin is only 1.58%, which is quite low for the industry. Rising costs could put further strain on profitability.
🔸 Earnings Decline – A 29.40% drop in quarterly earnings is a red flag. If this trend continues, it could impact future dividend growth.
🔸 Industry Competition – JJSF competes with much larger companies like PepsiCo and Mondelez, which have more pricing power and distribution reach.
🔸 Shifting Consumer Preferences – The push toward healthier snacks could affect demand for some of JJSF’s core products, potentially impacting long-term growth.
🔸 Stock Volatility – The stock has seen a significant pullback from its highs. While that could present a buying opportunity, it also means there’s risk of further declines.
Final Thoughts
J&J Snack Foods is a steady, reliable dividend stock, but there are a few concerns that investors should keep in mind. The current yield of 2.26% is attractive compared to historical levels, and the company has a strong balance sheet with low debt. However, declining earnings and margin pressures raise some questions about how much room there is for future dividend growth.
For investors looking for a consistent dividend payer, JJSF remains a solid option. But with the payout ratio creeping up toward 70% and earnings taking a hit, future increases may be more modest. The company will need to find ways to improve profitability if it wants to maintain its long-term dividend growth streak.
At the current price, the stock offers a decent balance of income and stability, but it’s not without risks. Keeping an eye on earnings trends and cost pressures will be key for anyone considering this as a long-term dividend investment.
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