Food Investing

By pjain      Published Aug. 3, 2020, 6:43 p.m. in blog Invest   

Food Industry

BGS Xx y6.6% div1.9 de=2.5 pay=162% [ (10 c30) 50]

RISK: Cold Plant Production Issues as states reopen

Each state is reopening at different times, which means different demands for food. Additionally, what will a second, or even third, wave do for demand? The company is taking all safety precautions with its own manufacturing and has been paying employees $2.00 an hour extra pay starting in March through at least May 22. But there is no guarantee there won't be production shutdowns in its own business going forward.

Strong Balance Sheet

Cash Flow is Solid but it still tapped its $700m revolver and drew down $100 m in mid-March so at the end of the first quarter it had cash and cash equivalents of $127.1 million.

y8.6% Dividend $0.5/sh Long Term 16yrs

  • Competitors, such as Campbell Soup, paid a dividend earlier this year as well, but Campbell's currently yields only 3%. It's Paying It's Big Dividend

On May 13, B&G Foods announced the payment of its quarterly dividend of $0.475 per share payable Recored holders July 30.

With the shares still down 24% year-to-date, it's currently yielding an incredible 8.6%.

Thesis Covid19 boost, fEPS 21% Valuation, Technicals

Shares Soar Off the Lows, But Are They Still a Deal? B&G Foods shares have been on a steady 5-year decline until shoppers ran into a panic to their supermarkets to buy food in mid-March during the coronavirus shutdowns.

  • The company said that increases in sales to supermarkets, mass merchants, warehouse clubs, wholesalers and e-commerce customers more than offset the declines at food service customers in the quarter. In 2019, food service customers were just 13% of the company's overall sales.

Will the US consumer continue to buy Green Giant and other "eat at home" foods and products in May and June? Even though the trends have been good, B&G Foods did not provide any guidance for the remainder of 2020. There are too many unknowns about the impacts of COVID-19 on business.

  • Expected to grow earnings by 21% this year.

FY outlook

No 2020 Guidance But Analysts Still Raised Estimates - EPS Consensus for 2020 has jumped to $1.99 from $1.67 in the last 30 days. Expected to grow earnings by 21% this year.

2020Q2 July

Shares were up 30% in the last month but have fallen from their highs, making the stock more attractive. They now trade with a forward P/E of just 11.1. On May 5, B&G Foods reported first quarter results and beat the Zacks Consensus by $0.03. Earnings were $0.46 versus the consensus of $0.43. Net sales rose 8.9% to $449.4 million as base business net sales increased 4.3% to $430.5 million. Net sales of Green Giant, including Le Sueur, rose 16.3% in the quarter year-over-year. Cream of Wheat sales rose 8.7%, Ortega was up 4.1% and Maple Grove Farms rose 3%. B&G Foods saw the higher sales trend continue in April, with net sales in April 2020 increasing more than $70 million, or more than 60%, compared to net sales in April 2019. But most states still had lock downs on in April.

  • That's earnings growth of 21.3% as the company only made $1.64 last year.

In the first two weeks of May, the company had net sales of $349 million, an increase of 57.6% over the same period in 2019. B&G Foods' net sales of $449.4 million in the first quarter climbed 8.9% year over year. Net income was up 67.3% in the quarter, year over year, to $28.1 million.

About - frozen foods doing good in C19

  • B&G Foods is in the right industry at the right time in 2020 as Americans stock up on frozen foods during the coronavirus crisis
  • Zacks Rank #1 (Strong Buy)

B&G Foods makes and sells branded shelf-stable and frozen foods in the United States, Canada and Puerto Rico.

More than 50 popular brands in its portfolio including - Back to Nature - Cream of Wheat, Mama's, - Dash - Green Giant vegetables - Mexican Las Palmas, Ortega tacos and taco sauce - Spice Islands and Victoria. - $19m sales Q1 baking powder and baking soda brand Clabber Girl bought last May'19

CPB

  • Competitors, such as Campbell Soup, paid a dividend earlier this year as well, but Campbell's currently yields only 3%.

Thesis, Valuation Q2'2020


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