Imperial Sugar's Monster Surge ... a Doubting Thomas Caveat (IPSU)

Imperial Sugar Co. (NASDAQ: IPSU) is still down and out, and it still has a credibility gap after the stock tour and quick sell-off aftermath last year. It was a real downer, down to the point that we named it one of the worst big equity stories of the year.

With earnings on Thursday, the sugar and sweetener outfit reported a net loss for the quarter ended December 31, 2011, of $3.5 million. This came to -$0.29 EPS, and sales were up only about 0.1% from a year ago at $227.7 million. The company talked about margin pressures, as well as unchanged production levels from a year earlier with rising commodity prices and “competitive pricing dynamics.”

The real news is that the company is supposedly in the late stages of exploring a sale of its interest in Wholesome Sweeteners with its partner to a third party. That third party remains unknown.

Until we see a deal or until a third party admits that it is in talks to do a deal with Imperial, we maintain that the news has to be treated with some skepticism. That is what happens when management has a credibility problem. Shares were up 79% at $6.02 against a 52-week range of $2.55 to $25.68. Volume was more than 8.2 million shares, which is more than 15-times normal trading volume.

Keep in mind that the market capitalization here is only $73.5 million after the big pop, so a sale worth any money might make a significant difference. Now we just have to hope that it is real news or that it was communicated properly.

Waiting … with skeptical patience …

JON C. OGG