U.S. markets closed
  • S&P 500

    3,585.62
    -54.85 (-1.51%)
     
  • Dow 30

    28,725.51
    -500.10 (-1.71%)
     
  • Nasdaq

    10,575.62
    -161.89 (-1.51%)
     
  • Russell 2000

    1,664.72
    -10.21 (-0.61%)
     
  • Crude Oil

    79.74
    -1.49 (-1.83%)
     
  • Gold

    1,668.30
    -0.30 (-0.02%)
     
  • Silver

    19.01
    +0.30 (+1.62%)
     
  • EUR/USD

    0.9801
    -0.0018 (-0.19%)
     
  • 10-Yr Bond

    3.8040
    +0.0570 (+1.52%)
     
  • GBP/USD

    1.1166
    +0.0043 (+0.38%)
     
  • USD/JPY

    144.7200
    +0.2770 (+0.19%)
     
  • BTC-USD

    19,115.72
    -225.37 (-1.17%)
     
  • CMC Crypto 200

    443.49
    +0.06 (+0.01%)
     
  • FTSE 100

    6,893.81
    +12.22 (+0.18%)
     
  • Nikkei 225

    25,937.21
    -484.84 (-1.83%)
     

B&G Foods (BGS) Stock Declines 13% YTD on Cost Inflation

·4 min read

B&G Foods, Inc. BGS appears troubled by escalated cost concerns. Other headwinds associated with the pandemic also pose threats to the company.

The Zacks Consensus Estimate for B&G Foods’ fiscal 2022 bottom line has declined by 10.6% to $1.77 per share over the past 30 days. This suggests a decrease of 5.9% from the figure of $1.88 per share reported in the year-ago period.

High Costs – a Major Concern

B&G Foods has been battling cost inflation like many other industry players. In the fourth quarter of fiscal 2021, the company’s gross margin of 19.7% contracted 160 basis points. The fourth-quarter 2021 gross margin was hurt by the greater-than-anticipated input cost inflation.

This included escalated raw materials and transportation expenses. Industry-wide input cost inflation and supply-chain disruptions also weighed on BGS’ adjusted EBITDA, which was, however, made up by contributions from Crisco’s buyout.

B&G Foods expects the input cost inflation to have a considerably industry-wide effect in fiscal 2022. Management expects to keep seeing significant cost inflation for inputs, such as ingredients, packaging and transportation. Although the company is undertaking various revenue-enhancing and cost-control measures, it is yet to be seen how effective these initiatives turn out.

B&G Foods, Inc. Price, Consensus and EPS Surprise

B&G Foods, Inc. Price, Consensus and EPS Surprise
B&G Foods, Inc. Price, Consensus and EPS Surprise

B&G Foods, Inc. price-consensus-eps-surprise-chart | B&G Foods, Inc. Quote

Other Obstacles

On its fourth-quarter fiscal 2021 call, management stated that apart from cost inflation, other pandemic-related factors, such as the duration of social distancing and stay-at-home trends, the operation of manufacturing facilities, any additional COVID-19 wave, the company’s ability to procure ingredients and other raw materials and supply-chain status, among others, may impact the performance.

The company’s international sales are mainly to its customers in Canada, with sales usually denominated in Canadian dollars. Net sales to international countries formed nearly 8.3% and 7.8% of the company’s total sales, respectively, in fiscal 2021 and fiscal 2020. Any weakening of the U.S. dollar against the Canadian dollar can impact B&G Foods’ performance. Hence, volatility in foreign exchange rates remains a worry for the company.

While BGS is benefiting from prudent buyouts like Crisco, as well as elevated at-home consumption, the abovementioned cost headwinds cannot be ignored.

Shares of this Zacks Rank #4 (Sell) company have dipped 12.8% year to date (YTD) compared with the industry’s fall of 3.9%.

Looking for Consumer Staple Stocks? Check These

Some better-ranked stocks are Tyson Foods TSN, Flowers Foods FLO and Pilgrim’s Pride PPC.

Tyson Foods, a renowned meat products company, sports a Zacks Rank #1 (Strong Buy) at present. Shares of Tyson Foods have dipped 1.7% YTD. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Tyson Foods’ current financial-year sales and earnings per share (EPS) suggests growth of 9.5% and 5.6%, respectively, from the year-ago reported number. TSN has a trailing four-quarter earnings surprise of 32.2%, on average.

Flowers Foods, the producer and marketer of packaged bakery products, currently carries a Zacks Rank #2 (Buy). Shares of Flowers Foods have tumbled 9% YTD.

The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and EPS suggests growth of 7.2% and roughly 4%, respectively, from the year-ago reported figure. FLO has a trailing four-quarter earnings surprise of around 6%, on average.

Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen, and value-added chicken and pork products, holds a Zacks Rank #2. Shares of Pilgrim’s Pride have moved down 17.8% YTD.

The Zacks Consensus Estimate for Pilgrim’s Pride’s current financial-year EPS suggests growth of 19.7% from the year-ago reported number. PPC has a trailing four-quarter earnings surprise of 24.9%, on average.


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

Tyson Foods, Inc. (TSN) : Free Stock Analysis Report

B&G Foods, Inc. (BGS) : Free Stock Analysis Report

Flowers Foods, Inc. (FLO) : Free Stock Analysis Report

Pilgrim's Pride Corporation (PPC) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research