A month has gone by since the last earnings report for B&G Foods (BGS Quick QuoteBGS - Free Report) . Shares have added about 17.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is B&G Foods due for a pullback? 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 drivers.

B&G Foods Q1 Earnings Miss Estimates, Sales Rise Y/Y

B&G Foods reported first-quarter fiscal 2021 numbers, with the top and the bottom line missing the Zacks Consensus Estimate. Nevertheless, earnings and sales increased on a year-over-year basis.

The company’s retail business continues to witness elevated demand as Americans are still cooking and seasoning meals at home amid the pandemic. Further, the foodservice business is showing signs of rebound. Notably, the away-from-home channel is improving as shelter at home measures are easing.

Quarterly Highlights

The company posted adjusted earnings of 52 cents per share, which missed the Zacks Consensus Estimate of 55 cents. Nonetheless, the bottom line increased 13% year over year.

Net sales of $505.1 million advanced 12.4% year over year on contribution from Crisco acquisition concluded on Dec 1, 2020, as well as persistent strength in base business net sales. Notably, net sales reflect gains worth $58.1 million from the Crisco acquisition. However, the top line missed the Zacks Consensus Estimate of $517.7 million.

Base business net sales inched down 0.6% to $446.9 million from $449.4 million reported in the year-ago quarter. We note that significant year-over-year base business net sales growth during January and February were countered by declines in base business net sales in March, thanks to pandemic-led demand and pantry loading in March 2020. Incidentally, unit volumes declined $9.8 million. Nonetheless, gains from net pricing coupled with positive impact of product mix to the tune of $6.6 million offered some respite. Also, favorable impacts of foreign currency translations of $0.7 million were an upside. Despite solid demand, the company expects base business net sales to decline year over year in the second quarter of 2021. The projected decline takes into account unfavorable comparisons stemming from massive spike in demand and pantry loading during the same time last year.

Net sales of spices & seasonings, Maple Grove Farms and Ortega increased 41.2%, 12.1% and 0.4%, respectively. Net sales of Green Giant (including Le Sueur), Clabber Girl and Cream of Wheat declined 16.4%, 6.8% and 4%, respectively. All said, net sales of all other brands in the aggregate fell 5.6% year on year.

Adjusted gross profit rose from $107.2 million to $123.3 million. Further, adjusted gross margin increased to 24.4% from 23.9% reported in the year-ago quarter.

SG&A expenses increased 26% to $50.4 million, thanks to rise in consumer marketing costs, acquisition/divestiture-induced and non-recurring expenses, warehousing costs as well as general and administrative expenses. Nonetheless, decline in selling expenses offered some cushion. As a percentage of sales, SG&A expenses expanded 1.1 percentage points to 10%.

Adjusted EBITDA increased 15.2% to $92.9 million, driven by the impact of higher net sales mainly driven by contributions from Crisco acquisition. Moreover, adjusted EBITDA margin improved from 18% to 18.4% during the quarter. Further, adjusted EBITDA before COVID-19 expenses increased 18.5% to $95.8 million.

During the quarter,the company incurred nearly $2.9 million in additional pandemic-led costs at its production facilities including temporary enhanced competition for manufacturing employees, compensation to manufacturing employees in quarantine as well ascostsassociated with take precautionary health and safety measures.

Other Updates

The company concluded the quarter with cash and cash equivalents of almost $43.1 million, long-term debt of almost $2,330 million and total shareholders’ equity of $840.6 million.

In a separate press release, the company informed that it has appointed Kenneth C. “Casey” Keller as thepresident and chief executive officer, effective Jun 14, 2021.

Guidance

B&G Foods reaffirmed its net sales guidance for fiscal 2021. Management anticipates net sales of $2.05-$2.10 billion in fiscal 2021. This includes positive impact from the acquisition of Crisco brand.  

Moreover, management expects to keep witnessing solid consumer demand for its products for the rest of fiscal 2021. However, management expects to keep seeing input cost inflation for ingredients, packaging and transportation. That said, the company is focused on undertaking cost-cutting efforts coupled with revenue-enhancing actions across many brands. Due to the uncertainties surrounding the coronavirus outbreak, the company did not provide detailed guidance for fiscal 2021.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -16.35% due to these changes.

VGM Scores

At this time, B&G Foods has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, B&G Foods has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.