Why Blue Buffalo Pet Products, Inc. Jumped 15% Last Month

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What happened

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Shares of Blue Buffalo Pet Products, Inc. (NASDAQ: BUFF) were looking healthier last month as the high-end pet food maker rose on a strong second-quarter earnings report.

The stock jumped 6.6% on Aug. 8, sparking a rally that led the stock to gain 15% for the month, according to data from S&P Global Market Intelligence. As the chart below shows, the stock rose steadily following the earnings report.

So what

Blue Buffalo said adjusted earnings per share increased from $0.19 to $0.21, matching estimates. However, revenue growth was sluggish, increasing 2.8% to $294.8 million, which was short of the analyst consensus of $302.5 million, but the stock rose anyway as the company offered solid guidance for the year and a plan for growing sales.

CEO Billy Bishop said, "We are excited to expand the distribution of our BLUE Life Protection Formula line with a launch in four leading mass and grocery retailers," including Target, and said the company would match its strategy to each of its retail partners' needs.

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Management also announced a $50 million share buyback program, which may also have encouraged shareholders.

Now what

The pet supply company called for full-year revenue of $1.24 billion-$1.27 billion, better than estimates at the time of $1.24 billion, and guided EPS at $0.91-$0.94, compared to expectations at $0.92.

Blue Buffalo shares have had a middling performance in the public markets since debuting in 2015. The gourmet pet supply market is becoming increasingly competitive with the likes of Freshpet and others looking to expand their reach as well. With Blue Buffalo now calling for just single-digit revenue growth this year, investors shouldn't expect last month's rally to continue. 

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.