Should You Invest In B&G Foods?

B&G Foods (NYSE: BGS  ) , a manufacturer and seller of shelf-stable food, recently posted third-quarter results that failed to meet Street estimates. Despite this, the company looks interesting in a lot of ways.

The numbers
Driven by the benefits of a host of acquisitions, revenue jumped 17.6% over last year to $181.4 million this quarter. This was below the consensus estimate of $184.8 million. B&G acquired a number of companies during the year, pushing up the top line, while sales from the base business decreased 4%. This was mainly because of a drop in product prices and a decline in volumes.

Acquisitions also pushed up the costs for the company, resulting in a lower bottom line. Earnings for the quarter stood at $15.4 million, a decrease of 9.2% over the prior year's quarter. However, excluding non-recurring items such as loss on extinguishment of debt and other acquisition-related charges, B&G had a healthier bottom line of $18.7 million; this was a 10.8% increase over last year.

A comparison with peers
Though B&G's base business sales decreased, its revenue has increased over the last five years. Its revenue growth has also been the highest compared to peers TreeHouse Foods (NYSE: THS  ) and General Mills (NYSE: GIS  ) , as depicted in the chart below:

BGS Revenue (Quarterly YoY Growth) Chart

BGS Revenue (Quarterly YoY Growth) data by YCharts.

B&G Foods' revenue increase of 17.6% is much higher than that of General Mills and TreeHouse Foods. Revenue growth has also been accompanied by stock price appreciation.

BGS Chart

BGS data by YCharts.

B&G Foods' stock price has jumped a whopping 669% in the last five years, much higher than its peers. B&G has been making its portfolio strong by eyeing healthy snacks businesses, as reflected by its recent acquisitions of Pirate's Booty in July and True North in May.

Performances thereof
TreeHouse has also grown through acquisition of other companies and has managed to provide a decent return of 147.7% over the last five years. It recently acquired Associated Brands, which will complement its dry mix products. The addition of Associated Brands will help TreeHouse in offering a variety of specialty teas and other powdered drinks . This should increase the food retailer's revenue.

Though General Mills' stock price has appreciated the lowest at 48% in the last five years, its revenue has appreciated 7.9%. General Mills managed to post higher revenue mainly because of its strategic efforts to keep up with industry trends. With the change in consumer tastes and preferences as well as the growing importance of healthy and organic food, General Mills shifted its focus to health-conscious customers. It started offering food made of natural ingredients such as Greek yogurts, which benefited the company largely and lead to higher sales.

Even B&G plans to take advantage of the trend. It acquired Rickland Orchards, which offers Greek yogurt coated products, for about $57.5 million this month . This acquisition will help the food retailer to attract health-conscious customers and boost its revenue.

The company also plans to take steps to increase revenue from the base business. B&G Foods plans to launch new products and make certain pricing adjustments in order to attract customers. One of the new introductions during the quarter was the new Fiesta Flats taco shells, which were well-received by customers . The company plans to continue stirring demand through many such new products.

Conclusive thoughts
Though the previous quarter was not up to the mark, the company is well placed for a good future. Its acquisitions are now well integrated into its business, and B&G is expected to start reaping the benefits in the months to come. Moreover, new product introductions, pricing measures, and strong marketing strategies should help the company further.

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