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What's in Store for B&G Foods (BGS) This Earnings Season?

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B&G Foods Inc. (BGS - Free Report) is set to report fourth-quarter 2017 results on Feb 27, after the market closes.

The company delivered a positive earnings surprise of 14.6% in the last quarter. B&G Foods surpassed expectations in two of the last four quarters, the average being a negative 6.4%.

Let’s see how things shape up prior to this announcement.

Factors at Play

The company’s aggressive acquisition strategy looks encouraging. B&G Foods acquired snack foods manufacturer, Back to Nature Foods Company, in October 2017. The deal is likely to contribute to earnings per share (EPS) and free cash flow. The earlier buyouts, Victoria Fine Foods Holding Company and Victoria Fine Foods in December 2016 as well as spices and seasonings business of ACH Food Companies in November 2016, are likely to contribute to fourth-quarter 2017 results.

Green Giant frozen products is expected to drive revenues in the to-be-reported quarter. Net sales of Green Giant frozen products increased double digits in the third quarter of 2017. The company’s base business experienced a turnaround in the third quarter driven by Green Giant frozen products, after declining 2.4% in the first quarter and 4.9% in the second quarter of 2017.

Moreover, the company’s Pirate Brands also had a strong rebound, delivering a 21% increase in net sales in the third quarter. Some of the smaller brands like Polaner, Underwood, New York Style and Cream of Wheat, also performed well in the third quarter. These positive trends are expected in the upcoming results.

B&G Foods projects cost savings from Mama Mary's plant consolidation, procurement savings and packaging changes of few Green Giant products to drive adjusted EBITDA in the fourth quarter of 2017.

However, the challenging conditions of the foods industry can hurt results to some extent. The North American food industry has been witnessing sluggish growth and slowdown in consumption over the last few quarters due to a shift in consumer preference toward healthier options. This has been hurting results of major food companies like General Mills, Inc. (GIS - Free Report) , Mondelez International Inc. (MDLZ - Free Report) and Kellogg Company (K - Free Report) .

The Zacks Consensus Estimate for revenues is pegged at $490.4 million, reflecting an increase of 18.6% year over year. The consensus estimate for earnings is pegged at 59 cents, showing an increase of 103.5% year over year.

Earnings Whisper

Our proven model does not show that B&G Foods is likely to beat estimates this quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP:  B&G Foods has Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 59 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

Zacks Rank: B&G Foods has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

B&G Foods, Inc. Price and EPS Surprise



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