B&G Foods Upgraded to Strong Buy

On January 15, Zacks Investment Research upgraded B&G Foods Inc. ( BGS - Snapshot Report ) to a Zacks Rank #1 (Strong Buy) as it has a bright outlook for the upcoming quarter, the results of which are due next month.

Why the Upgrade?

B&G Foods performed well in 2012. The food retailer has surpassed earnings estimates in the first 3 quarters of the year. The company’s outlook for the fourth quarter appears to be attractive, which is prompting analysts to raise the earnings estimates for the quarter. The key factors that are driving this improving outlook include regular acquisitions of complimentary brands, improving trends in the base business and regular increases in dividend rates.

B&G Foods’ third quarter adjusted earnings of 35 cents per share surpassed the Zacks Consensus Estimate by 9.4%. Further, earnings were up 40.0% on a year-over-year basis driven by revenue growth and margin expansion. Total sales grew 15.9% year over year to $154.2 million, driven by the addition of the Culver Specialty brands, which was bought in November 2011 from Unilever Plc (UL), and improving trends in the base business.

The company has a bright outlook for the fourth quarter as well. It is expecting EBITDA to reach the higher end of its previously provided guidance of $168 million to $170 million, reflecting a year-over-year increase of 29% at the mid point. Subsequently, the company is optimistic about achieving positive volume growth in the fourth quarter.

Other Stocks to Consider

The food retailers which have a favorable Zacks Rank are also performing well and worth considering are Smithfield Foods, Inc. ( SFD - Analyst Report ) - Zacks Rank #1 (Strong Buy), Tyson Foods Inc. ( TSN - Analyst Report ) - Zacks Rank #2 (Buy), and Kellogg Company ( K - Analyst Report ) - Zacks Rank #2 (Buy).