Tag Archives: NYSE:BGS

B&G Foods: Zacks’ Bull of the Day Play

B&G Foods (BGS) is a food products company with a huge portfolio of well-known brands. They manufacture and market processed and packaged foods across the United States and Canada.

Solid Third Quarter Results

The company reported their Q3 results on Oct 27, 2016.Net sales for the quarter surged 49.2%, thanks mainly to the acquisition of Green Giant.

Gross profit as a percentage of net sales increased to 36.3% from 33.6% in Q3 2015, primarily driven by the acquisition of Green Giant.

Adjusted net income came in at $36.7 million, or $0.56 per share, beating the Zacks Consensus Estimate of $0.52 per share. This was the third consecutive quarterly beat for the company. In the past four quarters, they have posted an average positive quarterly surprise of 12.16%.

Rising Estimates

After better than expected results and revised guidance, analysts have raised estimates for the company. Zacks Consensus Estimates for the current and the next year are now $2.18 per share and $2.43 per share respectively, up from $2.17 and $2.31, before the results.

The following chart shows earnings and price momentum:

B&G Foods, Inc. Price and Consensus

Growth through Acquisitions

The company continues to grow organically and through acquisitions. In the past 20 years, they have acquired more than 40 brands. They have an excellent record of turning around such heritage brands after acquiring them.

The company completed two acquisitions late last year.

Last month, the company acquired Victoria Fine Foods, the maker of variety of premium pasta and specialty sauces for approximately $70.0 million.

Earlier in November, they completed the acquisition of the spices and seasonings business of ACH Food for $365 million. They expect both the acquisitions to be immediately accretive to earnings and free cash flow.

Returning Cash to Shareholders

The stock has a very juicy dividend yield of 4.2% as of now. In November last year, they increased the dividend rate by 10.7% from $0.42 per share to $0.465 per share.

This is the 49th consecutive quarterly dividend declared since their IPO in October 2004.

The Bottom Line

While shares are not cheap after the run-up last year, the company has a much higher growth potential compared to most peers. Further, in the current uncertain environment, it makes sense to increase portfolio allocation to defensive industries like food.

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B&G Foods: Zacks’ Bull of the Day Play

Food stocks are hot this year as investors like their safety and high dividends in the current uncertain and ultra low rate environment. B&G Foods (BGS) is a food products company with a huge portfolio of well-known brands. They manufacture and market processed and packaged foods across the United States and Canada.

Solid First Quarter Results and Improved Guidance

The company reported excellent results for Q1. Gross profit surged 72% to $115.9 million from $67.4 million a year ago, primarily driven by the acquisition of Green Giant brand. The brand was purchased from General Mills in September last year.

After strong results they also raised their 2016 outlook. They now expected adjusted EPS to be in the range of $2.05 to $2.15. The stock hit its all-time high after results.

Soaring Estimates

After excellent results and upgraded guidance, analysts have raised estimates for the company. Zacks Consensus Estimates for the current and the next year are now $2.12 per share and $2.24 per share respectively, up from $1.92 and $2.02, before the results.

The following chart shows earnings and price momentum:

Returning Cash to Shareholders

The stock has a very juicy dividend yield of 3.75% as of now. Earlier this year they increased their quarterly cash dividend by 20%.   This was 46th consecutive quarterly dividend since their IPO in October 2004.

The Bottom Line

The company continues to grow organically and through acquisitions. In the past 20 years, they have acquired more than 40 brands. They have an excellent record ofturning around such heritage brands after acquiring them.

In addition to a top Zacks Rank #1 (Strong Buy), the stock enjoys the Zacks Industry Rank of 44 out of 265 (top 17%) and the Style Score of “A” for Growth.
While shares are definitely not cheap after the recent run-up, the company has a much higher growth potential compared to most peers. Further, in the current uncertain environment, it makes sense to increase portfolio allocation to defensive industries like food. And with interest rates expected to stay lower for longer, stocks with attractive dividends will likely remain in favor.

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