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Why B&G Foods Stock Was Sliding Today

By Jeremy Bowman - Jun 3, 2021 at 11:38AM

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Shares of the packaged-foods company pulled back after yesterday's pop.

What happened

One day after B&G Foods (BGS 0.77%) popped on a broader short squeeze in consumer stocks led by meme stocks like AMC Entertainment Holdings, many of those stocks, including B&G, were giving back some of those gains today.

As of 10:31 a.m. EDT, the stock was down 4.9%.

A woman in a motorized wheelchair holding an apple in a grocery store

Image source: Getty Images.

So what

On unusually high volume yesterday, B&G gained 13%, a sharp jump for a sleepy packaged foods stock on no news. More than 7 million shares changed hands, which compares to average volume of just 1.3 million. Thirty-six percent of B&G's float is sold short, which explains why it was one of several stocks that traders from Reddit's WallStreetBets forum and other platforms successfully targeted yesterday.

Today, however, many of those stocks were fading, with shares of AMC and others down double digits as some traders seemed to pocket profits. Given that movement, it's not surprising that B&G stock is down, especially as yesterday's gains reflected no change in the underlying value of the business.

Now what

As the owner of brands like Crisco, Green Giant, and Ortega, B&G is a slow-growth, recession-proof, consumer staples stock that shareholders count on for its juicy dividend yield, which now stands at 5.8%. As a packaged-food company, B&G was a big winner during the pandemic due to Americans stocking up at grocery stores and avoiding restaurants, but it faces tough comparisons this year.

In the first quarter, sales jumped 12.4% to $505.1 million as it benefited from last December's Crisco acquisition and persisting tailwinds from the pandemic. However, for the full year, the company sees revenue growth of just 4%-7% to $2.05 billion-$2.1 billion. Backing out the impact of the Crisco acquisition, full-year sales growth for 2021 is expected to be negative.

Still, that result was expected after a phenomenal performance last year that included 18.5% revenue growth to $1.97 billion and a 38% increase in adjusted earnings per share to $2.26.

B&G investors are better off ignoring the volatility over the last couple of days. For dividend investors, the stock still looks like a solid choice.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

B&G Foods, Inc. Stock Quote
B&G Foods, Inc.
BGS
$23.46 (0.77%) $0.18
AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
AMC
$24.44 (-4.01%) $-1.02

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