J&J Snack Foods (JJSF)

Snack food company J&J Snack Foods (NASDAQ:JJSF) met Wall Streets revenue expectations in Q3 CY2025, but sales fell by 3.9% year on year to $410.2 million. Its GAAP profit of $0.58 per share was 55% below analysts’ consensus estimates.

Company Overview

Best known for its SuperPretzel soft pretzels and ICEE frozen drinks, J&J Snack Foods (NASDAQ:JJSF) produces a range of snacks and beverages and distributes them primarily to supermarket and food service customers.

As America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.

Competitors in the snack food space include PepsiCo (NASDAQ:PEP), Nestle (SWX:NESN), and Utz Brands (NYSE:UTZ).

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.

With $1.58 billion in revenue over the past 12 months, J&J Snack Foods is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers.

As you can see below, J&J Snack Foods’s sales grew at a tepid 4.7% compounded annual growth rate over the last three years. This shows it failed to generate demand in any major way and is a rough starting point for our analysis.

This quarter, J&J Snack Foods reported a rather uninspiring 3.9% year-on-year revenue decline to $410.2 million of revenue, in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 2.5% over the next 12 months, a slight deceleration versus the last three years. This projection is underwhelming and suggests its products will see some demand headwinds.

J&J Snack Foods’s unit economics are higher than the typical consumer staples company, giving it the flexibility to invest in areas such as marketing and talent to reach more consumers. As you can see below, it averaged a decent 30.2% gross margin over the last two years. That means for every $100 in revenue, $69.75 went towards paying for raw materials, production of goods, transportation, and distribution.

J&J Snack Foods produced a 31.7% gross profit margin in Q3, in line with the same quarter last year. On a wider time horizon, J&J Snack Foods’s full-year margin has been trending down over the past 12 months, decreasing by 1.2 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs (such as raw materials and manufacturing expenses).

J&J Snack Foods was profitable over the last two years but held back by its large cost base. Its average operating margin of 6.4% was weak for a consumer staples business.

Looking at the trend in its profitability, J&J Snack Foods’s operating margin decreased by 2.1 percentage points over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. J&J Snack Foods’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, J&J Snack Foods generated an operating margin profit margin of 2.8%, down 6.5 percentage points year on year due to $24 million in non-recurring plant closure expenses. 

We track the change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

In Q3, J&J Snack Foods reported EPS of $0.58, down from $1.52 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

J&J Snack Foods has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 5.8% over the last two years, slightly better than the broader consumer staples sector.

Taking a step back, we can see that J&J Snack Foods’s margin dropped by 1.1 percentage points over the last year. Continued declines could signal it is in the middle of an investment cycle.

J&J Snack Foods’s free cash flow clocked in at $44.82 million in Q3, equivalent to a 10.9% margin. This result was good as its margin was 4.1 percentage points higher than in the same quarter last year, but we wouldn’t put too much weight on the short term because investment needs can be seasonal, causing temporary swings. Long-term trends are more important.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

J&J Snack Foods historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 8.2%, somewhat low compared to the best consumer staples companies that consistently pump out 20%+.

J&J Snack Foods reported $105.9 million of cash and $163.6 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $180.9 million of EBITDA over the last 12 months, we view J&J Snack Foods’s 0.3× net-debt-to-EBITDA ratio as safe. We also see its $1.12 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly J&J Snack Foods blew past analysts’ EBITDA expectations this quarter despite in line revenue. We were also glad its gross margin outperformed Wall Street’s estimates. Zooming out, we think this was a solid quarter. The stock remained flat at $82.70 immediately after reporting.

Updated: December 3, 2025 at 9:59 PM EST

Before deciding whether to buy J&J Snack Foods or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

J&J Snack Foods isn’t a terrible business, but it doesn’t pass our quality test. To kick things off, its revenue growth was a little slower over the last three years, and analysts expect its demand to deteriorate over the next 12 months. And while its EPS growth over the last three years has significantly beat its peer group average, the downside is its brand caters to a niche market. On top of that, its mediocre ROIC lags the market and is a headwind for its stock price.

J&J Snack Foods’s P/E ratio based on the next 12 months is 20.2x. Beauty is in the eye of the beholder, but we don’t really see a big opportunity at the moment. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $110 on the company (compared to the current share price of $92.40).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.