It has been about a month since the last earnings report for B&G Foods (BGS). Shares have lost about 5.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is B&G Foods due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
B&G Foods Q4 Earnings & Sales Beat Estimates
B&G Foods posted solid fourth-quarter fiscal 2022 results. Both the top and bottom lines increased year over year and comfortably beat the Zacks Consensus Estimate.
The company benefited from its supply recovery and pricing actions, which caught up with cost inflation. Also, a moderation in cost inflation aided margins, which are likely to continue witnessing a year-over-year recovery in fiscal 2023.
B&G Foods posted adjusted earnings of 40 cents per share, which cruised past the Zacks Consensus Estimate and our estimate of 23 cents. The bottom line increased 2.6% from the year-ago quarter.
Net sales of $623.2 million advanced 9% year over year, mainly due to pricing gains and a favorable product mix. This was somewhat offset by soft volumes stemming from price elasticity. The top line beat the Zacks Consensus Estimate of $586 million and our estimate of $588.4 million.
Base business net sales advanced 8.9% to $622.8 million due to net pricing gains and a favorable product mix. These were partially countered by a fall in the unit volume and currency headwinds.
Net sales of Crisco, spices & seasonings, Cream of Wheat, Clabber Girl, Ortega and Maple Grove Farms rose 15.9%, 17.4%, 26.1%, 28.8%, 10.4% and 6.6%, respectively. However, net sales of Green Giant (including Le Sueur) declined by 6.9%. Base net sales of all the other brands in the aggregate rose 12.1%.
The adjusted gross profit of $128.6 million increased from $112.7 million in the year-ago period. The adjusted gross margin expanded 90 basis points (bps) to 20.6%. The pace of input cost inflation moderated in the fourth quarter, wherein the company started getting more benefits from its prior list price hikes. This helped fuel the gross margin.
SG&A expenses dipped by 0.9% to $51.9 million on lower acquisition/divestiture-related and non-recurring expenses and reduced consumer marketing expenses, partly negated by higher general and administrative expenses, selling expenses and warehousing expenses. As a percentage of net sales, SG&A expenses decreased 0.8 percentage points to 8.3%.
Adjusted EBITDA jumped 10% to $93.6 million due to elevated pricing, which countered industry-wide input cost inflation and supply-chain woes. The adjusted EBITDA margin increased 10 bps to 15% in the fourth quarter of 2022.
B&G Foods ended the quarter with cash and cash equivalents of $45.4 million, long-term debt of around $2,339 million and total shareholders’ equity of $868.2 million. The company declared a quarterly cash dividend of 19 cents per share, payable on May 1, 2023, to shareholders of record as of Mar 31.
For fiscal 2023, management anticipates net sales in the band of $2.13-$2.17 billion. In fiscal 2022, net sales amounted to $2,163 million ($2.16 billion). The company anticipates adjusted EBITDA in the range of around $310-$330 million, whereas it reported $301 million in fiscal 2022.
Adjusted earnings per share (EPS) in fiscal 2023 are envisioned to be 95 cents to $1.15. In fiscal 2022, the company posted an adjusted EPS of $1.08. Management’s guidance excludes results for the Back to Nature business, which was divested on the first business day of fiscal 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
Currently, B&G Foods has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. It's no surprise B&G Foods has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
B&G Foods belongs to the Zacks Food - Miscellaneous industry. Another stock from the same industry, Kraft Heinz (KHC), has gained 0.7% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Kraft Heinz reported revenues of $7.38 billion in the last reported quarter, representing a year-over-year change of +10%. EPS of $0.85 for the same period compares with $0.79 a year ago.
For the current quarter, Kraft Heinz is expected to post earnings of $0.60 per share, indicating no change from the year-ago quarter. The Zacks Consensus Estimate has changed +0.7% over the last 30 days.
Kraft Heinz has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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