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B&G Foods (BGS) Down 2% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for B&G Foods (BGS - Free Report) . Shares have lost about 2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is B&G Foods due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
B&G Foods posted yet another quarter of robust results, when it reported third-quarter 2020 numbers. Top and bottom lines grew year over year and surpassed the Zacks Consensus Estimate for the third time in a row. Results continued to gain on the rising demand owing to the pandemic-induced increased at-home consumption. Apart from this, the impact of an extra week in the third quarter of 2020 aided results. Management expects the robust demand trend to continue throughout the fourth quarter and in 2021.
Additionally, the company is encouraged about its pending acquisition of the Crisco brand, which is likely to conclude in the fourth quarter of 2020 and immediately drive the company’s bottom line and free cash flow.
The company posted adjusted earnings of 74 cents per share, which easily beat the Zacks Consensus Estimate of 64 cents. Moreover, the bottom line grew 37% year over year.
Net revenues of $495.8 million advanced 22% year over year and surpassed the Zacks Consensus Estimate of $454 million. Revenues were backed by burgeoning demand for the company’s products amid the pandemic, along with the impact of an extra week in the quarter under review. Management estimates the additional week to have contributed about $35 million to B&G’s net sales. Apart from this, the top line gained from Farmwise’s buyout (concluded in Feb 2020) to the tune of $0.4 million.
Net sales from the company’s base business rallied 21.9% to $495.4 million on an $89.8-million increase in unit volumes, partly negated by a slight dip of $0.4 million in net pricing and currency headwinds of $0.3 million. Net sales from one of the company’s leading brands, Green Giant products (including Le Sueur), gained 31.5% in the quarter.
Apart from this, B&G Foods’ spices & seasonings, Victoria, Ortega, Cream of Wheat and Maple Grove Farms businesses registered sales increases of 29.5%, 55.9%, 17.2%, 18.2% and 3%, respectively. Net sales from all other brands grew 11.1%.
Adjusted gross profit rose 23.4% to $136.1 million and the adjusted gross margin was 27.5%, up 30 basis points (bps) year over year. SG&A expenses increased 13.9% to $43.4 million, thanks to a rise in general and administrative expenses, marketing expenses, warehousing expenses and selling expenses. This was partially offset by a decline in some non-recurring costs and costs related to acquisitions/divestitures. As a percentage of sales, SG&A expenses dropped 0.6 percentage points to 8.8%.
Adjusted EBITDA increased 21.3% to $104.6 million, driven by the impact of higher base business volumes on sales owing to COVID-19-related demand, as well as the impact of an extra week. Adjusted EBITDA margin fell 10 bps to 21.1%.
Other Financial Updates
The company concluded the quarter with cash and cash equivalents of almost $57 million, long-term debt of $1,804.6 million and shareholders’ equity of $843.4 million. Capital expenditures for 2020 are likely to be nearly $40-45 million.
Guidance
For 2020, management anticipates net sales of around $1.95-$1.97 billion. Adjusted EBITDA is expected to be nearly $360-$370 million. Finally, the bottom line is envisioned to be roughly $2.30-$2.40 per share. The Zacks Consensus Estimate is currently pegged at $2.22. Incidentally, the company’s net sales and adjusted earnings per share came in at $1,660.4 million (roughly $1.66 billion) and $1.64, respectively. Markedly, management’s guidance for 2020 doesn’t include any impact from the pending takeover of the Crisco brand.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 5.74% due to these changes.
VGM Scores
At this time, B&G Foods has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, B&G Foods has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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B&G Foods (BGS) Down 2% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for B&G Foods (BGS - Free Report) . Shares have lost about 2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is B&G Foods due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
B&G Foods Q3 Earnings Beat Estimates, Sales Rise Y/Y
B&G Foods posted yet another quarter of robust results, when it reported third-quarter 2020 numbers. Top and bottom lines grew year over year and surpassed the Zacks Consensus Estimate for the third time in a row. Results continued to gain on the rising demand owing to the pandemic-induced increased at-home consumption. Apart from this, the impact of an extra week in the third quarter of 2020 aided results. Management expects the robust demand trend to continue throughout the fourth quarter and in 2021.
Additionally, the company is encouraged about its pending acquisition of the Crisco brand, which is likely to conclude in the fourth quarter of 2020 and immediately drive the company’s bottom line and free cash flow.
The company posted adjusted earnings of 74 cents per share, which easily beat the Zacks Consensus Estimate of 64 cents. Moreover, the bottom line grew 37% year over year.
Net revenues of $495.8 million advanced 22% year over year and surpassed the Zacks Consensus Estimate of $454 million. Revenues were backed by burgeoning demand for the company’s products amid the pandemic, along with the impact of an extra week in the quarter under review. Management estimates the additional week to have contributed about $35 million to B&G’s net sales. Apart from this, the top line gained from Farmwise’s buyout (concluded in Feb 2020) to the tune of $0.4 million.
Net sales from the company’s base business rallied 21.9% to $495.4 million on an $89.8-million increase in unit volumes, partly negated by a slight dip of $0.4 million in net pricing and currency headwinds of $0.3 million. Net sales from one of the company’s leading brands, Green Giant products (including Le Sueur), gained 31.5% in the quarter.
Apart from this, B&G Foods’ spices & seasonings, Victoria, Ortega, Cream of Wheat and Maple Grove Farms businesses registered sales increases of 29.5%, 55.9%, 17.2%, 18.2% and 3%, respectively. Net sales from all other brands grew 11.1%.
Adjusted gross profit rose 23.4% to $136.1 million and the adjusted gross margin was 27.5%, up 30 basis points (bps) year over year. SG&A expenses increased 13.9% to $43.4 million, thanks to a rise in general and administrative expenses, marketing expenses, warehousing expenses and selling expenses. This was partially offset by a decline in some non-recurring costs and costs related to acquisitions/divestitures. As a percentage of sales, SG&A expenses dropped 0.6 percentage points to 8.8%.
Adjusted EBITDA increased 21.3% to $104.6 million, driven by the impact of higher base business volumes on sales owing to COVID-19-related demand, as well as the impact of an extra week. Adjusted EBITDA margin fell 10 bps to 21.1%.
Other Financial Updates
The company concluded the quarter with cash and cash equivalents of almost $57 million, long-term debt of $1,804.6 million and shareholders’ equity of $843.4 million. Capital expenditures for 2020 are likely to be nearly $40-45 million.
Guidance
For 2020, management anticipates net sales of around $1.95-$1.97 billion. Adjusted EBITDA is expected to be nearly $360-$370 million. Finally, the bottom line is envisioned to be roughly $2.30-$2.40 per share. The Zacks Consensus Estimate is currently pegged at $2.22. Incidentally, the company’s net sales and adjusted earnings per share came in at $1,660.4 million (roughly $1.66 billion) and $1.64, respectively. Markedly, management’s guidance for 2020 doesn’t include any impact from the pending takeover of the Crisco brand.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 5.74% due to these changes.
VGM Scores
At this time, B&G Foods has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, B&G Foods has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.