Shares of B&G Foods (BGS 2.47%), a seller and distributer of high-quality shelf-stable and frozen foods, jumped nearly 14% higher early Wednesday morning after the stay-at-home orders drove strong first-quarter results.
Net sales increased 8.9% to $449.4 million, easily topping analysts' estimates of $434.8 million. Adjusted earnings per share increased 4.5% to $0.46, again topping analysts' estimates of $0.43 per share.
While COVID-19 has been tragic, and its impact across the economy has been overwhelmingly negative for most businesses, B&G Foods has seen an uptick in business as stay-at-home orders forced more consumers to cook and eat at home. Starting in mid-March, B&G noticed a significant increase in consumption across its slew of brands, and that momentum has continued into May.
Despite seeing net positives from COVID-19 impacts, management is being cautious by drawing $100 million from its $700 million revolving credit facility, and ended the first quarter with cash and cash equivalents of $127 million. Management extended that caution by noting it believes it will exceed full-year net sales and adjusted EBITDA guidance, but that it would still suspend guidance with so much uncertainty remaining in 2020.
Investors would be wise to take the first-quarter, and likely second-quarter, surge in financial results with a grain of salt, because if the economy rebounds consumers who have grown accustomed to cooking at home might spend more time eating out than they had before stay-at-home orders. On the other hand, it's also possible some consumers have created new habits eating at home, and will continue that trend long-term. It's anybody's guess how consumers will rebound from COVID-19.