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B&G Foods (BGS) Down More Than 50% in 6 Months: Here's Why
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B&G Foods, Inc. (BGS - Free Report) appears in troubled shape as the company has been battling major cost hurdles, which are likely to persist. On its last earnings call, management lowered its adjusted EBITDA and adjusted earnings per share (EPS) for fiscal 2022.
Shares of this Zacks Rank #5 (Strong Sell) company have slumped 53.6% in the past six months against the industry’s growth of 5.2%. The Zacks Consensus Estimate for the fiscal 2023 EPS has declined from $1 to 96 cents per share in the past seven days.
In the third quarter of 2022, B&G Foods’ adjusted gross profit of $108 million declined 11.9% year over year from $122.6 million in the year-ago period. The adjusted gross margin contracted 340 basis points (bps) to 20.4%. The gross margin was hurt by greater-than-anticipated input cost inflation. This includes escalated raw materials and transportation expenses.
BGS expects the input cost inflation to bear a significant impact industry-wide for the remainder of fiscal 2022 and in fiscal 2023. It anticipates significant cost inflation for inputs, such as ingredients, packaging, labor and transportation, to continue based on factors like the pandemic, the Ukraine war, weather conditions, supply-chain hurdles and the shortage of labor. In fiscal 2023, the company expects inflation of 4-5%.
Low Q3 Earnings & Narrowed Guidance
B&G Foods posted adjusted earnings of 31 cents per share, which declined 43.6% from the year-ago quarter. The downside was a result of industry-wide inflation in input costs and supply-chain bottlenecks, together with the impact of stock worth $6.5 million sold by the company via an at-the-market equity offering program.
The company lowered its adjusted EBITDA view for fiscal 2022 to the $290-$300 million range compared with the $300-$320 million band mentioned earlier, whereas it reported $358 million in fiscal 2021. The adjusted EPS in fiscal 2022 is envisioned to be 90 cents to $1.00 versus the $1.08-$1.28 band stated before. In fiscal 2021, the company reported an EPS of $1.88.
Wrapping Up
B&G Foods is on track to mitigate the impacts of inflation on the gross margin by undertaking cost-saving initiatives, increasing list prices and locking in prices via short-term supply contracts and advance commodities purchase agreements. That said, the abovementioned headwinds cannot be ignored, at least in the near term.
Mondelez, which manufactures, markets and sells snack food and beverage products, currently has a Zacks Rank #2 (Buy). Mondelez has a trailing four-quarter earnings surprise of 6.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for MDLZ’s current financial-year sales suggests an increase of 8.7% from the year-ago reported number, while earnings indicate 2.4% growth.
Campbell Soup, which manufactures and markets food and beverage products, currently carries a Zacks Rank of 2. CPB has a trailing four-quarter earnings surprise of 8.7%, on average.
The Zacks Consensus Estimate for Campbell Soup’s current financial-year sales and earnings suggests growth of 8.3% and 4.6%, respectively, from the corresponding year-ago reported figures.
Conagra, a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG delivered an earnings surprise of 9.6% in the last reported quarter.
The Zacks Consensus Estimate for Conagra’s current financial-year sales and earnings suggests growth of 5.8% and 3.8%, respectively, from the corresponding year-ago reported figures.
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B&G Foods (BGS) Down More Than 50% in 6 Months: Here's Why
B&G Foods, Inc. (BGS - Free Report) appears in troubled shape as the company has been battling major cost hurdles, which are likely to persist. On its last earnings call, management lowered its adjusted EBITDA and adjusted earnings per share (EPS) for fiscal 2022.
Shares of this Zacks Rank #5 (Strong Sell) company have slumped 53.6% in the past six months against the industry’s growth of 5.2%. The Zacks Consensus Estimate for the fiscal 2023 EPS has declined from $1 to 96 cents per share in the past seven days.
B&G Foods, Inc. Price, Consensus and EPS Surprise
B&G Foods, Inc. price-consensus-eps-surprise-chart | B&G Foods, Inc. Quote
Cost Inflation Persists
In the third quarter of 2022, B&G Foods’ adjusted gross profit of $108 million declined 11.9% year over year from $122.6 million in the year-ago period. The adjusted gross margin contracted 340 basis points (bps) to 20.4%. The gross margin was hurt by greater-than-anticipated input cost inflation. This includes escalated raw materials and transportation expenses.
BGS expects the input cost inflation to bear a significant impact industry-wide for the remainder of fiscal 2022 and in fiscal 2023. It anticipates significant cost inflation for inputs, such as ingredients, packaging, labor and transportation, to continue based on factors like the pandemic, the Ukraine war, weather conditions, supply-chain hurdles and the shortage of labor. In fiscal 2023, the company expects inflation of 4-5%.
Low Q3 Earnings & Narrowed Guidance
B&G Foods posted adjusted earnings of 31 cents per share, which declined 43.6% from the year-ago quarter. The downside was a result of industry-wide inflation in input costs and supply-chain bottlenecks, together with the impact of stock worth $6.5 million sold by the company via an at-the-market equity offering program.
The company lowered its adjusted EBITDA view for fiscal 2022 to the $290-$300 million range compared with the $300-$320 million band mentioned earlier, whereas it reported $358 million in fiscal 2021. The adjusted EPS in fiscal 2022 is envisioned to be 90 cents to $1.00 versus the $1.08-$1.28 band stated before. In fiscal 2021, the company reported an EPS of $1.88.
Wrapping Up
B&G Foods is on track to mitigate the impacts of inflation on the gross margin by undertaking cost-saving initiatives, increasing list prices and locking in prices via short-term supply contracts and advance commodities purchase agreements. That said, the abovementioned headwinds cannot be ignored, at least in the near term.
3 Food Stocks to Grab
Some better-ranked stocks are Mondelez International (MDLZ - Free Report) , Campbell Soup (CPB - Free Report) and Conagra Brands (CAG - Free Report) .
Mondelez, which manufactures, markets and sells snack food and beverage products, currently has a Zacks Rank #2 (Buy). Mondelez has a trailing four-quarter earnings surprise of 6.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for MDLZ’s current financial-year sales suggests an increase of 8.7% from the year-ago reported number, while earnings indicate 2.4% growth.
Campbell Soup, which manufactures and markets food and beverage products, currently carries a Zacks Rank of 2. CPB has a trailing four-quarter earnings surprise of 8.7%, on average.
The Zacks Consensus Estimate for Campbell Soup’s current financial-year sales and earnings suggests growth of 8.3% and 4.6%, respectively, from the corresponding year-ago reported figures.
Conagra, a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG delivered an earnings surprise of 9.6% in the last reported quarter.
The Zacks Consensus Estimate for Conagra’s current financial-year sales and earnings suggests growth of 5.8% and 3.8%, respectively, from the corresponding year-ago reported figures.