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B&G Foods (BGS) Looks Promising on Rising Demand, Solid Brands

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B&G Foods, Inc. (BGS - Free Report) has been thriving on burgeoning demand amid the pandemic-led higher at-home consumption. The company is also seeing growth in its e-commerce sales, as the pandemic has taken online shopping to a higher level.

Additionally, a robust brand portfolio has been driving this renowned manufacturer, seller and distributor of frozen and shelf-stable foods as well as household products, whose shares have gained 11% in the past six months compared with the industry’s rise of 6.9%. In fact, this Zacks Rank #1 (Strong Buy) stock has also outdone the Zacks Consumer Staple sector’s growth of 9.6% in the same time frame. You can see the complete list of today’s Zacks #1 Rank stocks here.

Encouragingly, management expects solid demand trends in the fourth quarter and 2021. This seems to have boosted analysts’ sentiments as the Zacks Consensus Estimate for earnings in the fourth quarter and 2021 has risen by a cent and 7.1%, respectively, to 44 cents and $2.41 over the past 60 days.

Factors Painting B&G Foods’ Growth Picture

B&G Foods has been witnessing rising demand for its products since the second half of March 2020, thanks to the coronavirus-led stockpiling and higher at-home consumption. In this regard, the company’s higher net sales to mass merchants, warehouse clubs, supermarkets, wholesalers and e-commerce consumers have more than offset lower demand from Foodservice clients. As reported by Nielsen, the consumption for B&G Foods’ total portfolio grew 18% for the 13-week period ended Oct 3. For 2020, management anticipates net sales of around $1.95-$1.97 billion. Adjusted EBITDA is expected to be nearly $360-$370 million. The bottom line is envisioned to be roughly $2.30-$2.40 per share. 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.

The company is gaining from higher online sales, even more, due to increased social-distancing trends. Notably, the proportion of sales through the e-commerce channel has more than doubled this year. E-commerce sales are accelerating with pace, which is mainly attributable to efficient delivery services of the company’s retail customers like Amazon (AMZN - Free Report) . The company, which shares space with United Natural (UNFI - Free Report) , is making solid investments to enhance its e-commerce capacity. Some of the recent developments on this front include partnerships to get its brands and recipes on important sites like delish.com and allrecipes.com. Also, B&G Foods has launched a unique online interactive kitchen.

B&G Foods, Inc. Price, Consensus and EPS Surprise

B&G Foods, Inc. Price, Consensus and EPS Surprise

B&G Foods, Inc. price-consensus-eps-surprise-chart | B&G Foods, Inc. Quote

Certainly, the company has amplified its brand portfolio through innovation and meaningful acquisitions. In this regard, it acquired the Crisco brand from J.M. Smucker (SJM - Free Report) in December 2020. In 2021, the acquired business is expected to keep gaining from the pandemic-induced demand. Management expects the buyout to generate annual net sales of roughly $270 million, adjusted EBITDA of $65-$70 million and adjusted earnings per share of 45-50 cents for 2021. Prior to this, the company acquired Farmwise (in February 2020), while it also acquired and integrated retail baking powder maker, Clabber Girl (acquired in May 2019). Markedly, Farmwise made contributions of $0.4 million to B&G Foods’ third-quarter top line.

Additionally, the company has acquired notable brands such as Back to Nature, Green Giants, Victoria, Mama Mary, Specialty Brands, Rickland Orchardsn, TrueNorth, McCann’s and Ortega. Markedly, Green Giants has emerged as the company’s largest brand. During the third quarter, net sales from Green Giant products (including Le Sueur) increased 31.5%. The company remains committed to product innovation and other brand enhancement investments. Toward this end, the company particularly has solid plans for the Green Giant brand.

Clearly, B&G Foods appears to be in a solid shape and is most likely to keep its stellar show on.

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