American Italian Pasta Company (AIPC) has seen earnings jump as more consumers stay home to eat during the recession. AIPC has surprised on the Zacks Consensus Estimate 4 quarters in a row by an average of 21.05%.

Company Description

American Italian Pasta produces dry pasta under 10 consumer brands in the United States, including Golden Grain, Pennsylvania Dutch and Mrs. Grass, to name a few. It has 4 plants located in Missouri, South Carolina, Arizona and Italy.

It also provides pasta to the food service industry, including restaurants and cafeterias, and private label customers.

American Italian Pasta Surprised by 23.38% in the Fiscal First Quarter

On Feb 4, American Italian Pasta reported its fiscal first quarter results and beat the Zacks Consensus Estimate by 18 cents. Earnings per share were 95 cents compared to the consensus of 77 cents.

Fiscal first quarter 2010 contained only 13 weeks, one week less than the year ago period due to the calendar system the company uses (in which this “one week less” phenomena occurs every 6 years.) So, year over year comparisons will be more difficult.

Gross profit increased to 33.5%, or nearly $50 million, of revenue in this quarter’s 13-week period compared with 28.5%, or $48.8 million, of revenue in the 14-week period a year ago.

Volume also increased by 2%. American Italian Pasta continued to exit underperforming markets during the quarter and was able to increase its penetration of its customer brands in other markets, as was its strategy.

Zacks Consensus Estimates Rise

Analysts liked what they heard in February and have pushed up fiscal second quarter and full year estimates.

The fiscal second quarter 2010 Zacks Consensus Estimate gained 11 cents to 93 cents per share in the last 60 days.

The full year 2010 Zacks Consensus Estimate also jumped by 13.8% to $3.55 from $3.12 per share in the last 2 months. This is a decline of 13.4% from fiscal 2009’s earnings, but there is also one less week in the year.

Value Fundamentals

American Italian Pasta is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of only 11.2, which is well-under the value parameter of 15x. The company also has a price-to-book ratio of 2.55.

American Italian Pasta has a 1-year return on equity (ROE) of 24.5% which is well above the industry average of 16.1%.

Tracey Ryniec is the Value Stock Strategist for She is also the Editor in charge of the market-beating Zacks Value Trader service.

Zacks Investment Research