Is B&G Foods (BGS) a Great Stock for Value Investors?

Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put B&G Foods, Inc. BGS stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, B&G Foods has a trailing twelve months PE ratio of 13.4, as you can see in the chart below:

This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.9. If we focus on the stock’s long-term PE trend, the current level is fairly below the highs for the stock, suggesting that this might be a good entry point.

Further, the stock’s PE also compares favorably with its industry’s trailing twelve months PE ratio, which stands at 18.4. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.

We should also point out that B&G Foods has a forward PE ratio (price relative to this year’s earnings) of 13.1, so it is fair to say that a slightly more value-oriented path may be ahead for the stock in the near term too.

P/S Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, B&G Foods has a P/S ratio of about 1.1. This is significantly lower than the S&P 500 average, which comes in at 3.3 right now. Also, as we can see in the chart below, this is a little below the highs for this stock in particular over the past few years.

If anything, this suggests some level of undervalued trading—at least compared to historical norms.

Broad Value Outlook

In aggregate, B&G Foods currently has a Zacks Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes B&G Foods a solid choice for value investors, and some of its other key metrics make this pretty clear too.

For example, its P/CF ratio (another great indicator of value) comes in at 9.5, which is significantly lower than the industry average of 12.6. Clearly, BGS is a solid choice on the value front from multiple angles.

What About the Stock Overall?

Though B&G Foods might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of F and a Momentum score of F. This gives BGS a Zacks VGM score—or its overarching fundamental grade—of D. (You can read more about the Zacks Style Scores here >>)

Meanwhile, the company’s recent earnings estimates have been bullish. The current year and next have seen one estimates go higher in the past 30 days compared to no movement in the opposite direction.

This has had a significant impact on the consensus estimate as the current year estimate increased 1 cent in the past month, while the next year estimate has increased 2 ents over the same time frame. You can see the consensus estimate trend and recent price action for the stock in the chart below:

B&G Foods, Inc. Price and Consensus

This positive trend signifies bullish analyst sentiment, and its Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.

Bottom Line

B&G Foods is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, However, with a sluggish industry rank (bottom 29%), it is hard to get too excited about this company overall. In fact, over the past year, its industry has clearly underperformed the broader market, as you can see below:

So, value investors might want to wait for broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

Zacks Investment Research