B&G Foods, Inc. BGS appears to be a solid bet. Shares of the company have risen 30.7% in the past three months, outperforming the industry’s growth of 4%.
Let’s delve deeper into the factors that make this Zacks Rank #2 (Buy) stock an attractive buy.
Solid Top-Line Growth
B&G Foods’ top line has been increasing year over year for quite some time now. In the first quarter of 2018, sales growth was backed by contributions from the company’s largest brands. Green Giant, being one of the largest brands in the company, recorded its fourth consecutive quarter of double digit growth. Net sales of this brand increased 13%, courtesy of launch of new products. Its Ortega brand witnessed strong turnaround in the first quarter of 2018, wherein it generated net sales of $37.9 million, a 4.1% rise from $36.3 million recorded in the year-ago period, owing to innovative marketing initiatives. Another brand, Cream of Wheat, also registered a solid performance, with net sales increasing 11.2% to $18.4 million in the quarter, due to unseasonably cold weather. Victoria brand also saw a rise in sales of 11% to $11.8 million.
Management remains optimistic about the company’s sales growth, evident from its guidance, where it expects sales to be in the range of $1.72-$1.76 billion in 2018.
Acquisitions to Boost Sales
The company is actively pursuing strategic acquisitions to improve products and thus, boost growth. In this context, it recently acquired Back to Nature Food Company in 2017, which was expected to generate net sales of approximately $80 million within six months of integration period. Out of this, the company witnessed approximately $20 million of net sales in the first quarter.
Given the need for product innovation, B&G Foods has been on an acquisition spree, in recent times, to bolster its healthy offerings. The company has acquired few other notable brands such as Green Giants, Victoria, Mama Mary, Specialty Brands from affiliates of American Capital, Rickland Orchards, Pirate Brands and TrueNorth.
Inventory Reduction Plans
B&G Foods remains on track with its inventory reduction plans and has successfully reduced inventory by $46.5 million to $455.4 million by the end of the first quarter compared to $501.8 million at the end of 2017. Further, it expects to achieve its target of $75-$100 million inventory reduction, through the rest of the year.
Also, procurement savings on raw materials, managing freight and logistics network better, and optimizing warehousing and distribution centers are some of the cost-saving efforts undertaken by the company.
All said, we believe the aforementioned initiatives will be able to help the company continue with its solid show.
Looking for More Promising Food Stocks? Check These
Medifast Inc MED, a Zacks Rank #1 (Strong Buy) stock, has a long-term earnings per share growth rate of 15%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Chef’s Warehouse, Inc. CHEF, a Zacks Rank #2 (Buy) stock, has a long-term earnings per share growth rate of 22%.
Tate & Lyle Plc. TATYY, a Zacks Rank #2 stock, has a long-term earnings per share growth rate of 3.1%.
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