Bull of the Day: B&G Foods, Inc. (BGS)

Food stocks are hot this year as investors like their safety and high dividends in the current uncertain and ultra low rate environment. B&G Foods, Inc. (BGS) is a food products company with a huge portfolio of well-known brands. They manufacture and market processed and packaged foods across the United States and Canada.

BGS’s Solid First Quarter Results and Improved Guidance

B&G Foods reported excellent results for Q1. Gross profit surged 72% to $115.9 million from $67.4 million a year ago, primarily driven by the acquisition of Green Giant brand. The brand was purchased from General Mills, Inc. (GIS) in September last year.

After strong results they also raised their 2016 outlook. They now expected adjusted EPS to be in the range of $2.05 per share to $2.15 per share. The stock hit its all-time high after results.

BGS’s Soaring Estimates Lift BGS Stock

After excellent results and upgraded guidance, analysts have raised estimates for the company. Zacks Consensus Estimates for the current and the next year are now $2.12 per share and $2.24 per share respectively, up from $1.92 and $2.02, before the results.

The following chart shows earnings and price momentum:

BGS Continues to Return Cash to Shareholders
BGS stock has a very juicy dividend yield of 3.75% as of now. Earlier this year they increased their quarterly cash dividend by 20%.   This was the 46th consecutive quarterly dividend since their IPO in October 2004.

The Bottom Line on BGS Stock: A Strong Defensive Play 

The company continues to grow organically and through acquisitions. In the past 20 years, they have acquired more than 40 brands. They have an excellent record of turning around such heritage brands after acquiring them.

In addition to a top Zacks Rank #1 (Strong Buy), the stock enjoys the Zacks Industry Rank of 44 out of 265 (top 17%) and the Style Score of “A” for Growth.
While shares are definitely not cheap after the recent run-up, the company has a much higher growth potential compared to most peers.

Further, in the current uncertain environment, it makes sense to increase portfolio allocation to defensive industries like food. And with interest rates expected to stay lower for longer, stocks with attractive dividends will likely remain in favor.

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B&G FOODS CL-A (BGS): Free Stock Analysis Report

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