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B&G Foods (BGS) Q2 Earnings: Will Green Giant Steal the Show?

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B&G Foods (BGS) Q2 Earnings: Will Green Giant Steal the Show?

B&G Foods (BGS) is likely to gain from strength in its Green Giant business and efficient pricing initiatives. However, freight costs are expected to remain high.

B&G Foods, Inc. BGS is scheduled to release second-quarter 2018 results on Aug 2. The company, which delivered a positive earnings surprise of 7.8% in the last reported quarter, has a mixed surprise record over the trailing four quarters. Let’s delve deep and see what’s in store for the company this time around.

B&G Foods, Inc. Price and EPS Surprise
 

B&G Foods, Inc. Price and EPS Surprise | B&G Foods, Inc. Quote

Green Giant & Back to Nature to Drive Results

B&G Foods is likely to gain from the frozen products of its Green Giant business, which was acquired from General Mills GIS more than two years back. Green Giant has long been driving B&G Foods’ top line, which, in turn, 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 as well as favorable pricing.

Green Giant, being one of the largest brands in the company, recorded its 4th consecutive quarter of double-digit growth. Net sales of this brand increased by 13%, attributable to product launches of Green Giant Veggie Spirals, Green Giant Riced Veggies, Green Giant Veggie Tots and Green Giant Mashed Cauliflower. Clearly, Green Giant is likely to continue with its solid show and benefit B&G Foods’ top line in the quarter to be reported.

B&G Foods’ Ortega brand also witnessed strong turnaround in the first quarter of 2018, wherein it generated net sales growth of 4.1%, courtesy of innovative marketing initiatives. This makes the company optimistic about its prospects for the rest of the year. Moreover, the performance of Back to Nature (acquired in 2017) remained strong, which accounted for net sales of roughly $20 million in the first quarter. Management expects Back to Nature to contribute $80 million to net sales and $70 million to adjusted EBITDA, in 2018. This also gives out positive signals for the quarter to be reported.

Will Freight Costs be a Hurdle?

B&G Foods’ gross margin was hurt by industry hurdles like escalated freight expenses, in the last reported quarter. Also, management expects freight costs to remain high throughout 2018, though it plans to counter the same through solid cost-saving initiatives and an effective pricing strategy. That said, we believe B&G Foods is likely to witness earnings and sales growth in the second quarter of 2018.

What to Expect?

The Zacks Consensus Estimate for B&G Foods earnings has remained stable over the past 30 days at 42 cents per share, which shows a 2.4% increase from the year-ago period figure. Further, the Zacks Consensus Estimate for sales of $388 million indicates year-over-year growth of 5.4%.

What Does the Zacks Model Unveil?

Our proven model doesn’t show thatB&G Foods can beat bottom-line estimates this quarter. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Though B&G Foods carries a Zacks Rank #2, its Earnings ESP of 0.00% make surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post earnings beat:

Dean Foods DF, a Zacks #3 Ranked company, has an Earnings ESP of +11.63%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Molson Coors TAP has an Earnings ESP of +0.29% and a Zacks Rank of 3.

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Molson Coors Brewing Company (TAP) : Free Stock Analysis Report
 
Dean Foods Company (DF) : Free Stock Analysis Report
 
General Mills, Inc. (GIS) : Free Stock Analysis Report
 
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