Summary
- B&G Foods’ share price has steadily fallen about 30% this year.
- Increased freight costs, warehouse and procurement expenses are cutting more into gross margins.
- Valuation analysis shows that this company is undervalued.
- The hefty dividend yield of around 9% may be attractive, but the fundamentals prove that this company many not be worth the risk.
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B&G Foods, Inc. (BGS) has been taking a beating with share price trending down nearly 30% this year. With freight costs and other expenses going up and margins being cut down, this company and sector are suffering. Since B&G is now trading at 52-week low prices and its PE Ratio is historically low, I wanted to take a closer look at this company to reveal that it's undervalued. However, in doing so, I’ve also discovered that the fundamentals of this company are not impressive and that the foreseeable future of this company’s growth appears to be dim.
Snapshot of the Company
B&G Foods, Inc. is U.S. packaged-food maker. Its products are sold in US, Canada, and Puerto Rico. Some main brands have included: Ac'cent, B&G, B&M, Baker's Joy, Bear Creek Country Kitchens, Cary's, Clabber Girl, Cream of Rice, Cream of Wheat, Devonsheer, Don Pepino, Durkee, Emeril's, Green Giant, Grandma's Molasses, MacDonald's, Mama Mary's, Maple Grove Farms, Ortega, Regina, Sa-son, Sclafani, Smart Puffs, Spice Islands, Spring Tree, and Wright's. Products are distributed through various channels to supermarkets, wholesalers, mass merchants, warehouse clubs, and foodservice distributors.
A fast way for me to get an overall understanding of the condition of the business is to use the BTMA Stock Analyzer’s company rating score. It shows a score of around 74/100. Therefore, B&G Foods is considered to be a good company to invest in, since 70 is the lowest good company score. BGS has high scores for 10 Year Price Per Share, ROE, Earnings per share, Ability to Recover from a Market Crash or Downturn, and Gross Margin Percent. It has low scores for ROIC and PEG Ratio. A low PEG Ratio score indicates that the company may not be experiencing high growth consistently over the past five years. In summary, these findings show us that BGS seems to have above average fundamentals since the majority of categories produce good scores.
Before jumping to conclusions, we’ll have to look closer into individual categories to see what’s going on.
