B&G Foods (BGS) Up On Q2 Earnings Beat & Raised Outlook

Shares of B&G Foods, Inc. (NYSE:BGS) gained over 3% during afterhours trading as the shelf-stable and frozen foods company crushed second quarter 2016 earnings estimates and raised its outlook for fiscal 2016.

Second quarter 2016 adjusted earnings per share of 57 cents per share surpassed the Zacks Consensus Estimate of 46 cents by 23.9%. Earnings per share increased 67.6% from the year-ago quarter, owing to higher profit.

Total revenue of $306.4 million however missed the Zacks Consensus Estimate of $318 million by 3.6%.

While recent acquisitions pulled up sales, the base business reported weak sales due to lower volumes and currency headwinds

Revenues increased 58.2% year over year driven by strong sales of the Mama Mary’s brand, acquired in Jul 2015, and Green Giant acquired in Nov 2015. Net sales contribution of Mama Mary’s brand was $8.9 million and that of Green Giant was $107.2 million during the quarter.

Net sales of the company’s comparable base business decreased 1.3% during the quarter. Net sales of the comparable base business were hurt by a 0.8% decline in volume, 0.3% decrease in net pricing and 0.1% negative impact of foreign currency on sales.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 79.3% to $85.0 million during the quarter.

Outlook

B&G Foods raised its fiscal 2016 outlook for adjusted EBITDA and earnings per share. The Green Giant acquisition (acquired in Nov 2015 from General Mills (NYSE:GIS), Inc.) resulted in better-than-expected profitability in the first and second quarters of 2016, which led management to raise its expectation. The Green Giant integration is under process and on track to be completed in the third quarter of 2016.

The company expects full year 2016 adjusted earnings per share in a range of $2.11 to $2.21, which is significantly higher than the prior expectation of $2.05 to $2.15. The guidance also marks a year-over-year increase over $1.53 per share reported in 2015.

The company maintained its guidance for 2016 net sales. Net sales are expected between $1.39 billion to $1.42 billion. This is higher than $966.4 million reported in 2015.

Adjusted EBITDA is expected to range between $317.0 million to $327.0 million, significantly higher than the prior expected range of $310.0 million to $320.0 million.

B&G Foods currently has a Zacks Rank #3 (Hold).

Better-ranked stocks in the consumer staples space include Omega Protein Corporation (NYSE:OME) , TreeHouse Foods Inc. (NYSE:THS) and United Natural Foods, Inc (NASDAQ:UNFI) . All the three companies sport a Zacks Rank #1 (Strong Buy).

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