Market Price Ratios Price-Earnings Ratio (P/E Ratio) is a measurement commonly used to determine the companys share price

at present in relation to its per- share earnings.1 To find the price earnings ratio, a company will take its market value per share and divide it by the earnings per share.2 Displayed below is J & J Snack Foods Price-Earnings Ratio for the years 2009 to 2013:

JJSF PE RATIO RATINGS FOR THE YEARS ENDED 2009-2013 2009 19.69 2010 17.62 2011 18.54
Data Retrieved from YCharts

2012 21.19

2013 24.15

Notice from 2009 to 2010, there is a 2.07 drop in the P/E ratio, but grows from 2011 to 2013. From 2011 to 2012, JJSF experiences a 2.65 increase in ratio and a 2.96 increase from 2012 to 2013.3 As of April 5, 2013, JJSF and its industries PE ratio data were taken to see the companys performance in relation to its industries: Food Processing and Retail/Wholesale Food. Below is the comparison of industries to JJSF as of April 5, 2013:

PE RATIO COMPARISON JJSF Food Processing Industry Retail/Wholesale Food Industry

Data Retrieved from New York University

2013 24.15 20.52 17.64

1 2

(Price-Earnings Ratio - P/E Ratio, 2013). (Price-Earnings Ratio - P/E Ratio, 2013). 3 (J&J Snack Foods PE Ratio TTM, 2013)

In retrospective to the price-earnings ratio, a measure of the earnings yield is one that could also give a better understanding of the companys position. To find the yield, you simply divide the earnings per share (12 month) by the current market price. Essentially, this would be an inverse method of using the P/E ratio method of measuring a companys performance4. Displayed below is the calculated earnings yield for the company, as well as the S&P 500 earnings yield quarterly for the year 2012: EARNINGS YIELD COMPARISON JJSF S&P 500 Q1 5.41% 6.29%
Data Retrieved from YCharts

Q2 4.95% 6.45%

Q3 4.67% 6.00%

Q4 4.87% 6.07%

Comparing JJSF to the S&P 500 shows a fairly strong financial performance between the two. While JJSF does have a slightly smaller earnings yield ratio than of the S&P 500, both are accumulating a small portion of interest, which will be a significant investment. Not only can the earnings yield and price-earnings ratio determine the financial performance and growth of the company, but another method to measure the performance of JJSF is the Return on Equity (ROE). The ROE, according to Investopedia is a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.5 ROE is measured by the Net Income divided by the Shareholders Equity. The result is expressed in a percentage and the higher the ROE is, the more growth a company will have.6 Displayed below

4 5

(Earnings Yield, 2013). (Earnings Yield, 2013). 6 (Return On Equity , 2013).

is a comparison of the Return on Equity for the year ended 2009-2013 between JJSF and its two industries: Food Processing and Retail/Wholesale. ROE COMPARISON JJSF Food Processing Industry Retail/Wholesale Food Industry 2009 10.92% 12.6% 2010 13.68% 12.9% 7.18% 2011 12.79% 10.4% 11.12% 2012 12.96% 10.8% 10.56%

Data Retrieved from CSI Market.

According to the comparison above, you can see that JJSFs Return on Equity is performing below both its industries. In comparison with its industries, you can see a smaller growth than the food processing and retail/wholesale industries growth in all four quarters for the year 2012. Company growth is certainly a determining factor of its success. This could potentially be a threat to the company as they are underperforming in growth against the other industries. Not only will Return on Equity give an accurate representation of the companys financial performance, but the Return on Equity can be broken down into the following equation: ROE = (Net Profit/Sales) * (Sales/Assets) * (Assets/Equity)7. Using this equation, you find the Return on Equity. As you can see, JJSF and its industries do not have very large ROEs, which show a small amount of growth in each quarter. As a company, JJSF does not have much to concern about. While they do have the lowest growth of the three, it is not significantly low enough that would be extreme underperformance.

(Dupont Analysis, 2004).

After analysis of the Earnings yield and ROE, a calculation of the companys intrinsic value will give the true value of the stock of the company. Using the equation for the intrinsic value, the valuation of JJSF stock was found as follows: Intrinsic Value of JJSF = PEG ratio * g * EPS. The PEG ratio of 2.37 was found by taking the industry average price/earnings and dividing it by the annual EPS growth rate. The growth rate, as discussed in the earlier section, was a rate at 10.37%. Displayed below is the intrinsic value of JJSF, for the years ended 20092013:

2009 $8.59

2010 $10.82

JJSF INTRINSIC VALUE 2011 $11.64

2012 $12.34

2013 $18.70

Shown above, you can see the increase in intrinsic value from 2009-2013 and the large amount of growth of the stocks value from 2012-2013. The companys stock value is significantly larger than 2009, and is much larger than the discount dividends value of $22.05. This shows a much larger growth as a company and high financial performance in this area of measurement.