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B&G Foods (BGS) Gains on Pricing Actions & Prudent Buyouts
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Focus on strategic pricing actions has been favoring B&G Foods, Inc. (BGS - Free Report) . The shelf-stable and frozen food and household product company is on track with prudent buyouts to grow its portfolio. Meanwhile, the company undertakes strategic divestitures to focus on growth areas.
Let’s discuss this in detail.
Favorable Pricing Fuels Growth
In the second quarter of fiscal 2023, B&G Foods benefited from higher pricing. Pricing realization and the impact of product mix contributed $54.1 million to base business net sales. The company’s pricing actions caught up with the higher costs and inflation during the quarter. The gross margin expanded to 21.8% from 16% reported in the year-ago quarter.
Efficient pricing has been protecting B&G Foods’ margins. In the fiscal second quarter, adjusted EBITDA as a percentage of net sales stood at 14.6%, up from 11.3% reported in the year-ago quarter. In its last earnings call, management highlighted that improved margins resulted from favorable pricing and a moderation in input costs and logistics inflation. The company continues to see inflation across most of its portfolio, although the pace of inflation has slowed.
Image Source: Zacks Investment Research
Portfolio Refining Efforts
B&G Foods has a successful track record of acquisition-led growth. On May 5, 2023, it acquired the frozen vegetable manufacturing operations of Growers Express, LLC., which works well for the company’s Green Giant brand operations. The company acquired the Crisco brand in December 2020. Before this, it acquired Farmwise (in February 2020), while BGS also acquired an integrated retail baking powder maker, Clabber Girl (in May 2019). The company has also acquired notable brands such as Green Giants, Victoria, Mama Mary, TrueNorth, McCann’s and Ortega.
The company’s focus on reshaping its portfolio is also evident from its focus on making prudent divestitures. To this end, B&G Foods sold the Back to Nature brand in January 2023 – in a bid to exit the small, fragmented lower, margin snacks portfolio. Management is analyzing other divestiture possibilities to enhance portfolio focus and reduce debt.
Is All Rosy For B&G Foods?
B&G Foods has been struggling with lower volume, hurting its sales performance. In the fiscal second quarter, the company’s sales declined 1.9% to $469.6 million on Back to Nature divestiture. Base business net sales, which inched up slightly, were largely offset by decreased unit volume and unfavorable currency rates.
At the time of its fiscal second-quarter results, management lowered its net sales outlook for fiscal 2023. The company now anticipates net sales in the band of $2.11-$2.13 billion compared with the previous guidance of $2.13-$2.17 billion. In fiscal 2022, net sales amounted to $2,163 million ($2.16 billion).
Nevertheless, focus on growth endeavors will likely help B&G Foods’ stay afloat amid such hurdles.
The Zacks Rank #3 (Hold) company’s shares have gained 11.6% year to date against the industry’s 9.5% decline.
Some Solid Staple Bets
MGP Ingredients (MGPI - Free Report) , which produces and markets ingredients and distillery products, currently sports a Zacks Rank #1 (Strong Buy). MGPI has a trailing four-quarter earnings surprise of 18% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MGP Ingredients’ current financial-year sales and earnings per share suggests growth of 5.8% and 10.4%, respectively, from the corresponding year-ago reported figures.
Flowers Foods (FLO - Free Report) emphasizes providing high-quality baked items. The company currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 2.3%.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales suggests growth of 6.7% from the year-ago period’s actuals. FLO has a trailing four-quarter earnings surprise of 7.6% on average.
Utz Brands Inc. (UTZ - Free Report) manufactures a diverse portfolio of salty snacks, carrying a Zacks Rank #2. UTZ’s expected EPS growth rate for three to five years is 11.4%.
The Zacks Consensus Estimate for Utz Brands’ current fiscal year sales suggests growth of 3.7% from the year-ago reported numbers. UTZ has a trailing four-quarter earnings surprise of 12.3% on average.
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B&G Foods (BGS) Gains on Pricing Actions & Prudent Buyouts
Focus on strategic pricing actions has been favoring B&G Foods, Inc. (BGS - Free Report) . The shelf-stable and frozen food and household product company is on track with prudent buyouts to grow its portfolio. Meanwhile, the company undertakes strategic divestitures to focus on growth areas.
Let’s discuss this in detail.
Favorable Pricing Fuels Growth
In the second quarter of fiscal 2023, B&G Foods benefited from higher pricing. Pricing realization and the impact of product mix contributed $54.1 million to base business net sales. The company’s pricing actions caught up with the higher costs and inflation during the quarter. The gross margin expanded to 21.8% from 16% reported in the year-ago quarter.
Efficient pricing has been protecting B&G Foods’ margins. In the fiscal second quarter, adjusted EBITDA as a percentage of net sales stood at 14.6%, up from 11.3% reported in the year-ago quarter. In its last earnings call, management highlighted that improved margins resulted from favorable pricing and a moderation in input costs and logistics inflation. The company continues to see inflation across most of its portfolio, although the pace of inflation has slowed.
Image Source: Zacks Investment Research
Portfolio Refining Efforts
B&G Foods has a successful track record of acquisition-led growth. On May 5, 2023, it acquired the frozen vegetable manufacturing operations of Growers Express, LLC., which works well for the company’s Green Giant brand operations. The company acquired the Crisco brand in December 2020. Before this, it acquired Farmwise (in February 2020), while BGS also acquired an integrated retail baking powder maker, Clabber Girl (in May 2019). The company has also acquired notable brands such as Green Giants, Victoria, Mama Mary, TrueNorth, McCann’s and Ortega.
The company’s focus on reshaping its portfolio is also evident from its focus on making prudent divestitures. To this end, B&G Foods sold the Back to Nature brand in January 2023 – in a bid to exit the small, fragmented lower, margin snacks portfolio. Management is analyzing other divestiture possibilities to enhance portfolio focus and reduce debt.
Is All Rosy For B&G Foods?
B&G Foods has been struggling with lower volume, hurting its sales performance. In the fiscal second quarter, the company’s sales declined 1.9% to $469.6 million on Back to Nature divestiture. Base business net sales, which inched up slightly, were largely offset by decreased unit volume and unfavorable currency rates.
At the time of its fiscal second-quarter results, management lowered its net sales outlook for fiscal 2023. The company now anticipates net sales in the band of $2.11-$2.13 billion compared with the previous guidance of $2.13-$2.17 billion. In fiscal 2022, net sales amounted to $2,163 million ($2.16 billion).
Nevertheless, focus on growth endeavors will likely help B&G Foods’ stay afloat amid such hurdles.
The Zacks Rank #3 (Hold) company’s shares have gained 11.6% year to date against the industry’s 9.5% decline.
Some Solid Staple Bets
MGP Ingredients (MGPI - Free Report) , which produces and markets ingredients and distillery products, currently sports a Zacks Rank #1 (Strong Buy). MGPI has a trailing four-quarter earnings surprise of 18% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MGP Ingredients’ current financial-year sales and earnings per share suggests growth of 5.8% and 10.4%, respectively, from the corresponding year-ago reported figures.
Flowers Foods (FLO - Free Report) emphasizes providing high-quality baked items. The company currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 2.3%.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales suggests growth of 6.7% from the year-ago period’s actuals. FLO has a trailing four-quarter earnings surprise of 7.6% on average.
Utz Brands Inc. (UTZ - Free Report) manufactures a diverse portfolio of salty snacks, carrying a Zacks Rank #2. UTZ’s expected EPS growth rate for three to five years is 11.4%.
The Zacks Consensus Estimate for Utz Brands’ current fiscal year sales suggests growth of 3.7% from the year-ago reported numbers. UTZ has a trailing four-quarter earnings surprise of 12.3% on average.