B&G Foods, Inc. - Growth & Income
November 01 2011 - 8:00PM
Zacks
Estimates have been rising for
B&G Foods, Inc. (BGS)
after the company delivered solid third quarter results. It is a
Zacks #1 Rank (Strong Buy) stock.
Net sales were up 6% on strong volume and EPS
jumped 32% as the company leveraged its interest expense. Analysts
expect strong earnings growth to continue over the next couple of
years too.
Based on consensus estimates, analysts project 20%
EPS growth this year and 7% growth next year. In addition, the
company pays a dividend that yields a juicy 4.4%.
Company Description
B&G Foods, Inc. manufactures various
shelf-stable foods, including hot cereals, fruit spreads, spices,
seasonings, salad dressings, Mexican food, pickles and other
specialty foods products. Its brands include Cream of Wheat, Cream
of Rice, Emeril's, Las Palmas, Ortega and Red Devil.
On October 28, the company announced that it has
entered into an agreement to acquire the Mrs. Dash, Molly McButter,
Sugar Twin, Baker's Joy, Static Guard and Kleen Guard brands from
Unilever for approximately $325 million.
B&G Foods is headquartered in Parsippany, New
Jersey and has a market cap of $995 million.
Third Quarter Results
B&G delivered solid third quarter results on
October 25. Net sales rose 6% year-over-year to $133 million due in
large part to higher unit volume.
Higher commodity costs squeezed margins at B&G,
but only slightly. The gross margin declined 10 basis points to
31.2% of net sales. Income before taxes surged 27% as the company
leveraged its interest expense.
Earnings per share came in at 25 cents, meeting the
Zacks Consensus Estimate. It was a stellar 32% increase over the
same quarter in 2010.
Estimates Rising
Despite EPS coming in-line with estimates, analysts
revised their estimates for both 2011 and 2012 higher, sending the
stock to a Zacks #1 Rank (Buy).
The Zacks Consensus Estimate for 2011 is now $1.08,
representing 20% growth over 2010 EPS. The 2012 consensus estimate
is 7% higher at $1.16.
Attractive Dividend
In addition to solid earnings growth, B&G pays
a dividend that yields a juicy 4.4%. The company recently announced
the it was raising its quarterly dividend by 10%.
Valuation
The valuation picture looks reasonable for BGS.
Shares trade at 18.0x 12-month forward earnings, a premium to the
industry average of 15.5x. But this premium appears justified given
the company's solid growth projections and fat dividend yield.
Its prices to sales ratio of 1.9 is in-line with
its peers.
The Bottom Line
With rising earnings estimates, solid growth
projections, a 4.4% dividend yield and reasonable valuation,
B&G Foods offers investors strong total return potential.
Todd Bunton is the Growth & Income Stock
Strategist for Zacks Investment Research and Co-Editor of the
Reitmeister Value Investor.
B&G FOODS CL-A (BGS): Free Stock Analysis Report
Zacks Investment Research
B and G Foods (NYSE:BGS)
Historical Stock Chart
From Apr 2024 to May 2024
B and G Foods (NYSE:BGS)
Historical Stock Chart
From May 2023 to May 2024