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B&G Foods, Inc. BGS appears to be a delicious pick, which is set to keep its splendid momentum going in 2021. This renowned manufacturer, seller and distributor of frozen and shelf-stable foods as well as household products has seen its shares rally a whopping 70.1% this year compared with the industry’s rise of 1.9%.
Notably, the company has been benefiting from increased demand amid the coronavirus-induced higher at-home consumption. In fact, the company is also seeing growth in its e-commerce sales, especially amid the pandemic. Apart from this, a robust brand portfolio has been driving the company, the top and bottom lines of which surged year over year and beat the Zacks Consensus Estimate in third-quarter 2020. Moreover, management expects solid demand trends in the fourth quarter and 2021. Incidentally, the consensus mark for the fourth quarter and 2021 have risen a cent and 7.1%, respectively, to 44 cents and $2.41 over the past 30 days. Let’s delve deeper.
B&G Foods, Inc. Price, Consensus and EPS Surprise
B&G Foods, Inc. price-consensus-eps-surprise-chart | B&G Foods, Inc. Quote
Robust Pandemic-Led Demand
The company has been witnessing a rapid increase in demand for its products since the second half of March 2020, thanks to the coronavirus-led stockpiling and higher at-home consumption. In this regard, B&G Foods’ higher net sales to mass merchants, warehouse clubs, supermarkets, wholesalers and e-commerce consumers have more than offset lower demand from Foodservice clients. As reported by Nielsen, the consumption for B&G Foods’ total portfolio grew 18% for the 13-week period ended Oct 3. Management expects the robust demand trend to continue throughout the fourth quarter and 2021.
For 2020, management anticipates net sales of around $1.95-$1.97 billion. Adjusted EBITDA is expected to be nearly $360-$370 million. Finally, the bottom line is envisioned to be roughly $2.30-$2.40 per share. Incidentally, the company’s net sales and adjusted earnings per share came in at $1,660.4 million (roughly $1.66 billion) and $1.64, respectively.
B&G Foods, which shares space with TreeHouse Foods THS, is benefiting from higher online sales, especially thanks to increased social-distancing trends. Notably, the proportion of sales through the e-commerce channel has more than doubled this year. E-commerce sales are accelerating with pace, which is mainly attributable to efficient delivery services of the company’s retail customers like Amazon AMZN. The company is making solid investments to enhance its e-commerce capacity. Some of the recent developments on this front include partnerships to get its brands and recipes on important sites like delish.com and allrecipes.com. Also, the company has launched a unique online interactive kitchen.
Impressive Brand Portfolio
B&G Foods has strengthened its brand portfolio through innovation and meaningful acquisitions. In this regard, it acquired the Crisco brand from J.M. Smucker SJM in the beginning of this month. The acquisition is expected to immediately drive the company’s bottom line and free cash flow. In 2021, the acquired business is expected to keep gaining on the pandemic-induced demand. Management expects the buyout to generate annual net sales of roughly $270 million, adjusted EBITDA of $65-$70 million and adjusted earnings per share of 45-50 cents in 2021. Prior to this, the company acquired Farmwise (in February 2020), while it also acquired and integrated retail baking powder maker, Clabber Girl (acquired in May 2019). Markedly, Farmwise made contributions of $0.4 million to B&G Foods’ third-quarter top line.
Apart from this, the company has acquired notable brands such as Back to Nature, Green Giants, Victoria, Mama Mary, Specialty Brands, Rickland Orchardsn, TrueNorth, McCann’s and Ortega. Markedly, Green Giants has emerged as the company’s largest brand. During the third quarter, net sales from Green Giant products (including Le Sueur) increased 31.5%. The company remains committed to product innovation and other brand enhancement investments. Toward this end, the company particularly has solid plans for the Green Giant brand. Certainly, the Green Giant brand holds solid potential and is likely to continue being a driver in the future.
All said, we believe that the Zacks Rank #2 (Buy) company is most likely to keep its robust show on in 2021. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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