Shares of B&G Foods (BGS 0.72%) were moving higher today after the diversified packaged food company and dividend stock delivered solid results in its fourth-quarter earnings report.
B&G also continued to reorient its portfolio around growth brands.
According to data from S&P Global Market Intelligence, the stock was up 22.5% for the week as of Thursday's close.
Image source: Getty Images.
B&G makes the right moves
B&G, which owns brands such as Green Giant, Ortega, Crisco, and other supermarket staples said that revenue in the fourth quarter fell 7.2% to $578.1 million, which beat estimates at $571.4 million. Base business net sales, which strips out the impact of divestitures including the Green Giant shelf-stable business and its sale of the Back to Nature snack brand, fell 2.3% to $562.3 million.
Management said base business revenue declined in part because of a reduction in pricing related to a decline in costs in Crisco as oil input costs declined. It saw strength in brands like Clabber Girl, which is best known for baking powder, where sales rose 26.3%.
Even as revenue declined in the quarter, B&G reported improving gross margins, which were up 150 basis points to 21.7%. The increase was due to higher prices relative to input costs, lower transportation and warehousing costs, and lower depreciation.
The company took a loss on the sale of the Green Giant shelf-stable product line of $137.7 million last year, and it also took an impairment charge of $20.5 million related to several brands in the quarter, a sign that assets like Baker's Joy and Molly McButter could be losing value.
On the bottom line, adjusted earnings per share fell from $0.40 to $0.30, which topped estimates at $0.29.
CEO Casey Keller said, "B&G Foods' fourth quarter and fiscal 2023 results demonstrated strong progress, with improved margins, stabilizing volumes, stronger cash flows, and a reduction in leverage."
NYSE: BGS
Key Data Points
Why B&G stock gained on the news
B&G is primarily favored by income investors because it's a recession-proof, high-yield dividend stock, currently offering a dividend yield of 6.7%.
In addition to the better-than-expected earnings report, its guidance also indicates that the dividend is safe.
For 2024, the company called for revenue of $1.975 billion to $2.02 billion, down 3% from 2023, but slightly ahead of the consensus at $1.99 billion. It also sees adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $305 million to $325 million, and adjusted earnings per share of $0.80 to $1, which is down from $0.99 in 2023, but better than the consensus at $0.85. Finally, its debt balance fell from $2.39 billion to $2.05 billion, which gives the company more financial flexibility.
B&G stock is also cheap enough at a price-to-earnings ratio of 12 to earn a pop on the report.
