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BGS Expands Portfolio With College Inn, Kitchen Basics Acquisition
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Key Takeaways
B&G Foods acquired College Inn and Kitchen Basics brands for about $110M to expand cooking essentials.
The deal is expected to add $110M-$120M in sales and be accretive to EPS, EBITDA and cash flow.
BGS expects the brands to generate $18M-$22M in adjusted EBITDA and add 8-12 cents to EPS.
B&G Foods, Inc. (BGS - Free Report) continues to advance its portfolio transformation strategy with a focus on strengthening the core shelf-stable business. The company recently completed the acquisition of the College Inn and Kitchen Basics broth and stock brands from Del Monte Foods for approximately $110 million in cash, expanding its presence in the cooking essentials category.
The acquired brands are expected to deliver immediate financial benefits. Management noted that the deal will be accretive to earnings per share, adjusted EBITDA and free cash flow. On an annualized basis, the business is projected to generate net sales of $110 million to $120 million and adjusted EBITDA in the range of $18 million to $22 million. In addition, the acquisition is expected to contribute approximately 8 cents to 12 cents to adjusted earnings per share.
In terms of valuation, the transaction reflects a purchase price multiple of about 5.5x adjusted EBITDA, or roughly 4.8x when factoring in expected tax benefits. The asset purchase structure is anticipated to yield around $15 million in tax savings on a net present value basis. B&G Foods funded the acquisition through cash on hand, including proceeds from earlier divestitures, along with borrowings under its existing revolving credit facility.
Strategically, the move aligns with B&G Foods’ broader transformation efforts. The company has been actively divesting non-core businesses while sharpening its focus on higher-margin categories to enhance profitability and reduce leverage. Management has emphasized that such portfolio optimization initiatives, including acquisitions like this, are intended to enhance margins, strengthen cash flows and simplify operations.
Overall, the addition of College Inn and Kitchen Basics supports B&G Foods’ strategy to build a more focused, stable and profitable business, while capitalizing on steady demand trends in the shelf-stable food segment.
B&G Foods’ Zacks Rank & Share Price Performance
Shares of this Zacks Rank #2 (Buy) company have gained 9.8% over the past three months, outperforming the industry and the S&P 500’s decline of 8.2% and 3.6%, respectively. The stock also outpaced the broader Consumer Staples sector, which rose 1.9% over the same period.
BGS Stock's Past 3 Month Performance
Image Source: Zacks Investment Research
Is BGS a Value Play Stock?
B&G Foods currently trades at a forward 12-month P/E ratio of 8.99, which is lower than the industry average of 14.29 and notably below the sector average of 16.56. This valuation positions the stock at a modest discount relative to both its direct peers and the broader consumer staples sector.
BGS P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
Other Stocks to Consider
The Hershey Company (HSY - Free Report) engages in the manufacture and sale of confectionery products and pantry items in the United States and internationally. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Hershey’s current financial-year sales and earnings indicates growth of 4.8% and 30.1%, respectively, from the prior-year reported levels. HSY delivered a trailing four-quarter earnings surprise of 17.2%, on average.
Mama's Creations, Inc. (MAMA - Free Report) manufactures and markets fresh deli-prepared foods in the United States. At present, MAMA flaunts a Zacks Rank #1. Mama's Creations delivered a trailing four-quarter earnings surprise of 133.3%, on average.
The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 39.9% and 44.4%, respectively, from the year-ago figures.
US Foods Holding Corp. (USFD - Free Report) engages in the marketing, sale and distribution of fresh, frozen and dry food and non-food products to foodservice customers in the United States. USFD currently carries a Zacks Rank of 2. US Foods Holding delivered a trailing four-quarter earnings surprise of 2.2%, on average.
The Zacks Consensus Estimate for US Foods Holding’s current fiscal-year sales and earnings implies growth of 5.4% and 20.9%, respectively, from the year-ago figures.
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BGS Expands Portfolio With College Inn, Kitchen Basics Acquisition
Key Takeaways
B&G Foods, Inc. (BGS - Free Report) continues to advance its portfolio transformation strategy with a focus on strengthening the core shelf-stable business. The company recently completed the acquisition of the College Inn and Kitchen Basics broth and stock brands from Del Monte Foods for approximately $110 million in cash, expanding its presence in the cooking essentials category.
The acquired brands are expected to deliver immediate financial benefits. Management noted that the deal will be accretive to earnings per share, adjusted EBITDA and free cash flow. On an annualized basis, the business is projected to generate net sales of $110 million to $120 million and adjusted EBITDA in the range of $18 million to $22 million. In addition, the acquisition is expected to contribute approximately 8 cents to 12 cents to adjusted earnings per share.
In terms of valuation, the transaction reflects a purchase price multiple of about 5.5x adjusted EBITDA, or roughly 4.8x when factoring in expected tax benefits. The asset purchase structure is anticipated to yield around $15 million in tax savings on a net present value basis. B&G Foods funded the acquisition through cash on hand, including proceeds from earlier divestitures, along with borrowings under its existing revolving credit facility.
Strategically, the move aligns with B&G Foods’ broader transformation efforts. The company has been actively divesting non-core businesses while sharpening its focus on higher-margin categories to enhance profitability and reduce leverage. Management has emphasized that such portfolio optimization initiatives, including acquisitions like this, are intended to enhance margins, strengthen cash flows and simplify operations.
Overall, the addition of College Inn and Kitchen Basics supports B&G Foods’ strategy to build a more focused, stable and profitable business, while capitalizing on steady demand trends in the shelf-stable food segment.
B&G Foods’ Zacks Rank & Share Price Performance
Shares of this Zacks Rank #2 (Buy) company have gained 9.8% over the past three months, outperforming the industry and the S&P 500’s decline of 8.2% and 3.6%, respectively. The stock also outpaced the broader Consumer Staples sector, which rose 1.9% over the same period.
BGS Stock's Past 3 Month Performance
Image Source: Zacks Investment Research
Is BGS a Value Play Stock?
B&G Foods currently trades at a forward 12-month P/E ratio of 8.99, which is lower than the industry average of 14.29 and notably below the sector average of 16.56. This valuation positions the stock at a modest discount relative to both its direct peers and the broader consumer staples sector.
BGS P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
Other Stocks to Consider
The Hershey Company (HSY - Free Report) engages in the manufacture and sale of confectionery products and pantry items in the United States and internationally. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Hershey’s current financial-year sales and earnings indicates growth of 4.8% and 30.1%, respectively, from the prior-year reported levels. HSY delivered a trailing four-quarter earnings surprise of 17.2%, on average.
Mama's Creations, Inc. (MAMA - Free Report) manufactures and markets fresh deli-prepared foods in the United States. At present, MAMA flaunts a Zacks Rank #1. Mama's Creations delivered a trailing four-quarter earnings surprise of 133.3%, on average.
The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 39.9% and 44.4%, respectively, from the year-ago figures.
US Foods Holding Corp. (USFD - Free Report) engages in the marketing, sale and distribution of fresh, frozen and dry food and non-food products to foodservice customers in the United States. USFD currently carries a Zacks Rank of 2. US Foods Holding delivered a trailing four-quarter earnings surprise of 2.2%, on average.
The Zacks Consensus Estimate for US Foods Holding’s current fiscal-year sales and earnings implies growth of 5.4% and 20.9%, respectively, from the year-ago figures.