B&G Foods (BGS) — which sells frozen foods as well as syrups, sauces, jams, jellies and beans — has been one of the few companies that is actually benefiting from the current crisis, notes Taesik Yoon, editor of Forbes Investor.
BGS began to see a significant increase in net sales in the second half of March 2020 as the COVID-19 pandemic reached the U.S. and consumers began pantry loading and increasing their at-home consumption as a result of increased social distancing and stay-at-home mandates.
As a result, it reported Q1 net sales of $449.4 million last night that represented a much higher-than-expected increase of 8.9% from last year’s levels.
While the adjusted earnings for the period of 46 cents per share were less impressive and actually missed the consensus estimate by 2 cents due to the extra costs BGS incurred to maintain a safe working environment and better compensate workers.
These steps included installing plexiglass barriers at spots in its manufacturing locations where line workers must work in close proximity, enhancing sanitization procedures at all of its sites, performing temperature checks, increasing wages.
The firm's results still represented solid bottom-line growth of 4.5%, which easily bests the performance of most companies in the current climate.
BGS would not provide any specific guidance for the remainder of 2020 as the company — like so many other firms — is unable to fully estimate the impact the COVID-19 pandemic will have on its operations at this time.
However, the company seems pretty confident that full-year fiscal 2020 net sales and adjusted EBITDA will materially exceed the $1.66-1.68 billion and $302.5-312.5 million it had guided to in February.
Indeed, with the trend of consumers increasingly cooking and eating at home that began in mid-March leading to a 60% year-over-year spike in net sales during the month of April and continuing into early May, the current quarter is clearly shaping up to be another good one.
And with these increasingly favorable prospects only serving to bolster the company’s ability to maintain its huge quarterly dividend payout of 47.5 cents per share, which it remains committed to and is currently yield a very generous 9.2%, we think you would be wise to pick up BGS’s stock.
