B&G Foods Inc (BGS) Valuation

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Company Profile (obtained from Google Finance): B&G Foods, Inc. (B&G Foods) manufactures, sells and distributes a diverse portfolio of shelf-stable food products across the United States, Canada and Puerto Rico. The Company’s products include hot cereals, fruit spreads, canned meats and beans, spices, seasonings, marinades, hot sauces, wine vinegar, maple syrup, molasses, salad dressings, Mexican-style sauces, taco shells and kits, salsas, pickles, peppers and other specialty food products. It distributes these products throughout the United States via a nationwide network of independent brokers and distributors to supermarket chains, food service outlets, mass merchants, warehouse clubs, non-food outlets and specialty food distributors.

ModernGraham Comments: None at this time.

Defensive and Enterprising Investor Tests:

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 1/7

1. Adequate Size of Enterprise – market capitalization of at least $2 billion – FAIL
2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests: Score = 4/5

1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
3. Earnings Stability – positive earnings per share for at least 5 years – PASS
4. Dividend Record – currently pays a dividend – PASS
5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary:

• Last updated 12/29/09
• MG Value = $14
• MG Opinion = Undervalued
• Value based on 3% Growth = $7
• Value based on 0% Growth = $4
• Market-implied growth rate = 6.37%
• Net Current Asset Value (NCAV) = $2.46
• Current Ratio = 1.81
• Price to Book Ratio = 1.98

Key Data:

Balance Sheet – 10/3/2009

• Current Assets    $260,340,000
• Current Liabilities    $143,850,000
• Total Debt    $439,540,000
• Total Assets    $917,100,000
• Intangible Assets    $338,700,000
• Goodwill    $253,350,000
• Total Liabilities    $687,740,000
• Outstanding Shares    47,370,000

Earnings Per Share – Diluted

• 2009 (estimate) – $0.59
• 2008 – $0.27
• 2007 – $0.54
• 2006 – $0.42
• 2005 – $0.29
• 2004 – $0.51
• 2003 – $0.07
• 2002 – $0.13
• 2001 – ($0.16)
• 2000 – ($0.38)
• 1999 – ($0.17)

Earnings Per Share – Modern Graham

• 2009 (estimate) – $0.45
• 2008 – $0.39
• 2007 – $0.42
• 2006 – $0.34
• 2005 – $0.25
• 2004 – $0.17

Valuation History:

• 12/29/09 – Value $14, Actual Price $9.60, Undervalued & Enterprising
• 9/22/09 – Value $14, Actual Price $8.50, Undervalued & Enterprising
• 6/24/09 – Value $13, Actual Price $8.03, Undervalued & Enterprising