B&G Foods, Inc.

BGS Details

Based in Parsippany, New Jersey, B&G Foods, Inc. (NYSE: BGS), along with its subsidiaries, is engaged in manufacturing, selling and distributing high-quality, branded shelf-stable and frozen foods across the United States, Canada and Puerto Rico.

FY20 Results Performance

The company has delivered a healthy performance in FY20 and net sales increased by 18.5% YoY with net sales from base business grew by 14.7% YoY. This growth was mainly attributed to sharp rise in demand for its products on the back of COVID-19 pandemic. Further, the growth in sales was supported by the acquisitions and also due to the inclusion of additional one reporting week in FY20. In line with decent growth in sales, the company witnessed 19.4% YoY rise in its adjusted EBITDA to $361.2 million.

Financial Snapshot (Source: Company Reports)

Dividend Update

The company on 1 March 2021 declared a regular quarterly cash dividend of $0.475 per share. The dividend would be paid on 30^th April 2021.

Outlook

The company anticipates that its net sales in FY21 are likely to be around $2.05 billion to $2.10 billion which will benefit from the extra eleven months of ownership of the Crisco brand.

Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)

Stock Recommendation

The company’s rich portfolio mix with a good quality of brands and products, continued strong momentum in consumer demand for its products, and continued acceleration in sales momentum would aid the company in tapping future growth opportunities. We have applied EV/Sales multiple based relative valuation (on an illustrative basis) and the target price reflects a rise of low double-digit (in % terms). We have applied some discount to peer average EV/Sales multiple because of risks related to higher debt profile and rise in SG&A expenses.

The first resistance has been made at US$41.669 and first support at US$27.18.

Thus, we give a “Buy” recommendation on the stock at the current market price of US$30.34 per share, up by 0.2% on April 5, 2021.

BGS Daily Technical Chart (Source: Refinitiv (Thomson Reuters))

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