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Why B&G Foods, Inc. Shares Sank

By Brian D. Pacampara, CFA - Feb 26, 2016 at 4:57PM

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The food producer's outlook leaves a salty taste in Mr. Market's mouth.

Image source: B&G Foods.

What: Shares of food producer B&G Foods (BGS -7.11%) were off 11.6% at 3:20 p.m. ET on Friday after its quarterly results and guidance disappointed Wall Street.

So what: B&G shares have risen in recent weeks on optimism heading into the quarter, but mixed Q4 results -- adjusted EPS of $0.43 missed the consensus by $0.04 on a revenue increase of 44% -- coupled with downbeat guidance are forcing Mr. Market to sober up a bit. In fact, comparable base business sales were flat over the year-ago period, giving analysts plenty of negative vibes over the company's organic growth trajectory.

 

Now what: Management now sees full-year EPS of $1.98-$2.09 on revenue of $1.38 billion-$1.42 billion versus the consensus of $2.09 and $1.45 billion, respectively. "2015 was a year characterized by a return to our long history of solid, disciplined financial performance, the continuation of our long-standing acquisition preference for center of the store shelf-stable brands with our acquisition of Mama Mary's, and of course our transformational acquisition of the Green Giant brand," said President and CEO Robert Cantwell. "We are excited to enter the frozen food category and by the other possibilities that an iconic brand like Green Giant provides us, and we are truly inspired to reinvigorate Green Giant for today's consumer through innovation and enhanced marketing."

With the shares still up more than 30% even with today's double-digit plunge, however, I'd hold out for an even wider margin of safety before betting on that bullishness. 

 

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