B&G Foods Inc Valuation – July 2018 $BGS

Company Profile (excerpt from Reuters): B&G Foods, Inc. (B&G Foods), incorporated on November 25, 1996, is a holding company. The Company manufactures, sells and distributes a portfolio of shelf-stable and frozen foods across the United States, Canada and Puerto Rico. Its products include frozen and canned vegetables, hot cereals, fruit spreads, canned meats and beans, bagel chips, spices, seasonings, hot sauces, wine vinegar, maple syrup, molasses, salad dressings, pizza crusts, Mexican-style sauces, dry soups, taco shells and kits, salsas, pickles, peppers, tomato-based products, puffed corn and rice snacks, nut clusters and other specialty products. Its products are marketed under various brands, including Ac’cent, B&G, B&M, Baker’s Joy, Bear Creek Country Kitchens, Brer Rabbit, Canoleo, Cary’s, Cream of Rice, Cream of Wheat, Devonsheer, Don Pepino, Durkee, Emeril’s, Grandma’s, Green Giant, JJ Flats, Joan of Arc, Las Palmas, Le Sueur, MacDonald’s, Mama Mary’s, Maple Grove Farms of Vermont, Molly McButter, Mrs. Dash, New York Flatbreads, New York Style, Old London, Original Tings, Ortega, Pirate’s Booty, Polaner, Regina, Sa-son, Sclafani, Smart Puffs, Spice Islands, Spring Tree, Static Guard, Sugar Twin, Tone’s, Trappey’s, TrueNorth, Underwood, Vermont Maid, Victoria, Weber and Wright’s. It also sells and distributes Static Guard, a household product brand. It sells and distributes its products directly and through a network of brokers and distributors to supermarket chains, foodservice outlets, mass merchants, warehouse clubs, non-food outlets and specialty distributors.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BGS – July 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,041,463,347 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.78 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 223.72% Pass
6. Moderate PEmg Ratio PEmg < 20 14.34 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.29 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.78 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.71 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.09
MG Growth Estimate 15.00%
MG Value $80.29
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $30.24
MG Value based on 0% Growth $17.73
Market Implied Growth Rate 2.92%
Current Price $29.90
% of Intrinsic Value 37.24%

B&G Foods, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position. . The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.94 in 2014 to an estimated $2.09 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.92% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into B&G Foods, Inc. revealed the company was trading above its Graham Number of $24.23. The company pays a dividend of $1.86 per share, for a yield of 6.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.34, which was below the industry average of 25.4, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-26.95.

B&G Foods, Inc. performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$26.95
Graham Number $24.23
PEmg 14.34
Current Ratio 3.78
PB Ratio 2.29
Current Dividend $1.86
Dividend Yield 6.22%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $767,830,000
Total Current Liabilities $203,227,000
Long-Term Debt $2,096,897,000
Total Assets $3,438,763,000
Intangible Assets $2,394,279,000
Total Liabilities $2,566,115,000
Shares Outstanding (Diluted Average) 66,715,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.97
Dec2017 $3.26
Dec2016 $1.73
Dec2015 $1.22
Dec2014 $0.76
Dec2013 $0.98
Dec2012 $1.20
Dec2011 $1.04
Dec2010 $0.67
Dec2009 $0.44
Dec2008 $0.27
Dec2007 $0.54
Dec2006 $0.42
Dec2005 $0.29
Dec2004 $1.19
Dec2003 $0.00
Dec2002 $0.30
Dec2001 -$0.38
Dec2000 -$0.92

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.09
Dec2017 $1.96
Dec2016 $1.26
Dec2015 $1.03
Dec2014 $0.94
Dec2013 $0.97
Dec2012 $0.89
Dec2011 $0.69
Dec2010 $0.49
Dec2009 $0.40
Dec2008 $0.44
Dec2007 $0.51
Dec2006 $0.48
Dec2005 $0.43
Dec2004 $0.34
Dec2003 -$0.12
Dec2002 -$0.19

Recommended Reading:

Other ModernGraham posts about the company

B&G Foods Inc Valuation – August 2016 $BGS
B&G Foods Inc Valuation – March 2016 $BGS
B&G Foods Inc. Analysis – September 2015 Update $BGS
The 8 Best Stocks For Value Investors This Week – 6/27/15
B&G Foods Analysis – June 2015 Update $BGS

Other ModernGraham posts about related companies

Tyson Foods Inc Valuation – June 2018 $TSN
Mondelez International Inc Valuation – June 2018 $MDLZ
Hormel Foods Corp Valuation – June 2018 $HRL
J M Smucker Co Valuation – May 2018 $SJM
Kraft Heinz Co Valuation – May 2018 $KHC
Dr Pepper Snapple Group Inc Valuation – May 2018 $DPS
Sysco Corp Valuation – May 2018 $SYY
General Mills Inc Valuation – May 2018 $GIS
Archer-Daniels Midland Co Valuation – May 2018 $ADM
Conagra Brands Inc Valuation – May 2018 $CAG

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

B&G Foods Inc Valuation – August 2016 $BGS

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how B&G Foods Inc (BGS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): B&G Foods, Inc. is a holding company. The Company manufactures, sells and distributes a diverse portfolio of shelf-stable and frozen food, and household products across the United States, Canada and Puerto Rico. Its products include frozen and canned vegetables, hot cereals, fruit spreads, canned meats and beans, bagel chips, spices, seasonings, hot sauces, wine vinegar, maple syrup, molasses, salad dressings, pizza crusts, Mexican-style sauces, dry soups, taco shells and kits, salsas, pickles, peppers, tomato-based products, puffed corn and rice snacks, nut clusters and other specialty products. Its products are marketed under various brands, including Ac’cent, B&G, B&M, Baker’s Joy, Bear Creek Country Kitchens, Brer Rabbit, Canoleo, Cary’s, Cream of Rice, Cream of Wheat, Devonsheer, Don Pepino, Emeril’s, Grandma’s Molasses, Green Giant, JJ Flats, Joan of Arc, Las Palmas, Le Sueur, MacDonald’s, Mama Mary’s, Maple Grove Farms of Vermont and Molly McButter.

BGS Chart

BGS data by YCharts

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of BGS – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $3,169,651,215 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.91 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 206.40% Pass
6. Moderate PEmg Ratio PEmg < 20 36.16 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.77 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 4.91 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.99 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

BGS value chart August 2016

EPSmg $1.30
MG Growth Estimate 7.04%
MG Value $29.45
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $18.92
MG Value based on 0% Growth $11.09
Market Implied Growth Rate 13.83%
Current Price $47.18
% of Intrinsic Value 160.18%

B&G Foods, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.89 in 2012 to an estimated $1.3 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 13.83% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into B&G Foods, Inc. revealed the company was trading above its Graham Number of $20.34. The company pays a dividend of $1.54 per share, for a yield of 3.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 36.16, which was above the industry average of 30.19. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-23.02.

B&G Foods, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

BGS charts August 2016

Net Current Asset Value (NCAV) -$23.02
Graham Number $20.34
PEmg 36.16
Current Ratio 4.91
PB Ratio 4.77
Current Dividend $1.54
Dividend Yield 3.26%
Number of Consecutive Years of Dividend Growth 6

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $486,765,000
Total Current Liabilities $99,130,000
Long-Term Debt $1,545,999,000
Total Assets $2,556,458,000
Intangible Assets $1,902,710,000
Total Liabilities $1,934,001,000
Shares Outstanding (Diluted Average) 62,872,000

Earnings Per Share History

Next Fiscal Year Estimate $1.85
Dec2015 $1.22
Dec2014 $0.76
Dec2013 $0.98
Dec2012 $1.20
Dec2011 $1.04
Dec2010 $0.67
Dec2009 $0.44
Dec2008 $0.27
Dec2007 $0.54
Dec2006 $0.42
Dec2005 $0.29
Dec2004 $1.19
Dec2003 $0.00
Dec2002 $0.30
Dec2001 -$0.38
Dec2000 -$0.92

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.30
Dec2015 $1.03
Dec2014 $0.94
Dec2013 $0.97
Dec2012 $0.89
Dec2011 $0.69
Dec2010 $0.49
Dec2009 $0.40
Dec2008 $0.44
Dec2007 $0.51
Dec2006 $0.48
Dec2005 $0.43
Dec2004 $0.34
Dec2003 -$0.12
Dec2002 -$0.19
Dec2001 -$0.37
Dec2000 -$0.31

Recommended Reading:

Other ModernGraham posts about the company

B&G Foods Inc Valuation – March 2016 $BGS
B&G Foods Inc. Analysis – September 2015 Update $BGS
B&G Foods Inc. Analysis – September 2015 Update $BGS
The 8 Best Stocks For Value Investors This Week – 6/27/15
B&G Foods Analysis – June 2015 Update $BGS

Other ModernGraham posts about related companies

Tyson Foods Inc Valuation – August 2016 $TSN
Mondelez International Inc Valuation – August 2016 $MDLZ
Hormel Foods Corp Valuation – August 2016 $HRL
J.M. Smucker Co Valuation – August 2016 $SJM
General Mills Inc Valuation – August 2016 $GIS
Archer Daniels Midland Co – August 2016 $ADM
Coca-Cola Co Valuation – July 2016 $KO
Monster Beverage Corp Valuation – July 2016 $MNST
Campbell Soup Company Valuation – July 2016 $CPB
Kellogg Company Valuation – July 2016 $K

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

B&G Foods Inc Valuation – March 2016 $BGS

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – February 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how B&G Foods Inc (BGS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): B&G Foods, Inc. (B&G Foods) is a holding company that manufactures, sells and distributes a range of shelf-stable food and household products across the United States, Canada and Puerto Rico. Its products include hot cereals, fruit spreads, canned meats and beans, bagel chips, spices, seasonings, hot sauces, wine vinegar, maple syrup, molasses, salad dressings, Mexican-style sauces, dry soups, taco shells and kits, salsas, pickles, peppers, tomato-based products, puffed corn and rice snacks, nut clusters and other specialty products. The Company’s products are marketed under a range of brands, including Ac’cent, B&G, B&M, Baker’s Joy, Bear Creek Country Kitchens, Brer Rabbit, Canoleo, Cary’s, Cream of Rice, Cream of Wheat, Devonsheer, Don Pepino, Emeril’s, Grandma’s Molasses, JJ Flats, Joan of Arc, Las Palmas, MacDonald’s, Maple Grove Farms of Vermont and Molly McButter, among others.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of BGS

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,132,946,157 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.43 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 210.40% Pass
6. Moderate PEmg Ratio PEmg < 20 26.05 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.26 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.43 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.26 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

BGS value chart March 2016

EPSmg $1.32
MG Growth Estimate 7.32%
MG Value $30.58
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $19.16
MG Value based on 0% Growth $11.23
Market Implied Growth Rate 8.77%
Current Price $34.42
% of Intrinsic Value 112.57%

B&G Foods, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.89 in 2012 to an estimated $1.32 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.77% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

B&G Foods, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

BGS charts March 2016

Net Current Asset Value (NCAV) -$29.14
Graham Number $18.37
PEmg 26.05
Current Ratio 3.43
PB Ratio 4.26
Dividend Yield 4.01%
Number of Consecutive Years of Dividend Growth 6

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Dec2015
Total Current Assets $463,161,000
Total Current Liabilities $134,868,000
Long-Term Debt $1,725,866,000
Total Assets $2,571,715,000
Intangible Assets $1,915,485,000
Total Liabilities $2,114,030,000
Shares Outstanding (Diluted Average) 56,656,000

Earnings Per Share History

Next Fiscal Year Estimate $1.90
Dec2015 $1.22
Dec2014 $0.76
Dec2013 $0.98
Dec2012 $1.20
Dec2011 $1.04
Dec2010 $0.67
Dec2009 $0.44
Dec2008 $0.27
Dec2007 $0.54
Dec2006 $0.42
Dec2005 $0.29
Dec2004 $1.19
Dec2003 $0.00
Dec2002 $0.30
Dec2001 -$0.38
Dec2000 -$0.92

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.32
Dec2015 $1.03
Dec2014 $0.94
Dec2013 $0.97
Dec2012 $0.89
Dec2011 $0.69
Dec2010 $0.49
Dec2009 $0.40
Dec2008 $0.44
Dec2007 $0.51
Dec2006 $0.48
Dec2005 $0.43
Dec2004 $0.34
Dec2003 -$0.12
Dec2002 -$0.19
Dec2001 -$0.37
Dec2000 -$0.31

Recommended Reading:

Other ModernGraham posts about the company

B&G Foods Inc. Analysis – September 2015 Update $BGS
The 8 Best Stocks For Value Investors This Week – 6/27/15
B&G Foods Analysis – June 2015 Update $BGS
The Best Companies of the Food Processing Industry – June 2015
18 Companies in the Spotlight This Week – 3/21/15

Other ModernGraham posts about related companies

Hormel Foods Corp Stock Valuation – February 2016 $HRL
J.M. Smucker Co Valuation – February 2016 $SJM
Archer-Daniels Midland Co Valuation – February 2016 $ADM
Keurig Green Mountain Inc Valuation – January 2016 Update $GMCR
Monster Beverage Corp Valuation – January 2016 Update $MNST
Monster Beverage Corp Valuation – January 2016 Update $MNST
Mead Johnson Nutrition Co Valuation – November 2015 Update $MJN
Archer Daniels Midland Valuation – November 2015 Update $ADM
The Best Companies of the Food Processing Industry – October 2015
J.M. Smucker Company Valuation – October 2015 Update $SJM

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

B&G Foods Inc. Analysis – September 2015 Update $BGS

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how B&G Foods Inc. (BGS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): B&G Foods, Inc. (B&G Foods) is a holding company that manufactures, sells and distributes a range of shelf-stable food and household products across the United States, Canada and Puerto Rico. Its products include hot cereals, fruit spreads, canned meats and beans, bagel chips, spices, seasonings, hot sauces, wine vinegar, maple syrup, molasses, salad dressings, Mexican-style sauces, dry soups, taco shells and kits, salsas, pickles, peppers, tomato-based products, puffed corn and rice snacks, nut clusters and other specialty products. The Company’s products are marketed under a range of brands, including Ac’cent, B&G, B&M, Baker’s Joy, Bear Creek Country Kitchens, Brer Rabbit, Canoleo, Cary’s, Cream of Rice, Cream of Wheat, Devonsheer, Don Pepino, Emeril’s, Grandma’s Molasses, JJ Flats, Joan of Arc, Las Palmas, MacDonald’s, Maple Grove Farms of Vermont and Molly McButter, among others.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of BGS – September 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,117,890,716 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.26 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 157.14% Pass
6. Moderate PEmg Ratio PEmg < 20 33.27 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.44 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.26 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.79 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

BGS value Chart September 2015

EPSmg $1.10
MG Growth Estimate 9.06%
MG Value $29.22
Opinion Overvalued
MG Value based on 3% Growth $15.92
MG Value based on 0% Growth $9.33
Market Implied Growth Rate 12.38%
Current Price $36.53
% of Intrinsic Value 125.02%

B&G Foods Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned by the short dividend history, and the high PEmg and PB ratios, while the Enterprising Investor is only initially concerned by the level of debt relative to the net current assets.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $0.68 in 2011 to an estimated $1.10 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 12.38% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on B&G Foods Inc. (BGS)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

BGS Charts September 2015

Net Current Asset Value (NCAV) -$17.28
Graham Number $15.97
PEmg 33.27
Current Ratio 3.26
PB Ratio 4.44
Dividend Yield 3.72%
Number of Consecutive Years of Dividend Growth 5

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $289,559,000
Total Current Liabilities $88,769,000
Long-Term Debt $961,947,000
Total Assets $1,734,903,000
Intangible Assets $1,313,138,000
Total Liabilities $1,268,942,000
Shares Outstanding (Diluted Average) 56,683,000

Earnings Per Share History

Next Fiscal Year Estimate $1.41
Dec14 $0.76
Dec13 $0.98
Dec12 $1.20
Dec11 $1.04
Dec10 $0.67
Dec09 $0.44
Dec08 $0.27
Dec07 $0.54
Dec06 $0.42
Dec05 $0.29
Dec04 $0.51
Dec03 $0.00
Dec02 $0.30
Dec01 -$0.38
Dec00 -$0.92

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.10
Dec14 $0.94
Dec13 $0.97
Dec12 $0.89
Dec11 $0.68
Dec10 $0.49
Dec09 $0.40
Dec08 $0.39
Dec07 $0.42
Dec06 $0.34
Dec05 $0.25
Dec04 $0.12
Dec03 -$0.12
Dec02 -$0.19
Dec01 -$0.37
Dec00 -$0.31

Recommended Reading:

Other ModernGraham posts about the company

The 8 Best Stocks For Value Investors This Week – 6/27/15
B&G Foods Analysis – June 2015 Update $BGS
The Best Companies of the Food Processing Industry – June 2015
18 Companies in the Spotlight This Week – 3/21/15
B&G Foods Inc. Quarterly Valuation – March 2015 $BGS

Other ModernGraham posts about related companies

Hormel Foods Corporation Analysis – September 2015 Update $HRL
Dr Pepper Snapple Group Inc Analysis – September 2015 Update $DPS
Sysco Corporation Analysis – September 2015 Update $SYY
Coca-Cola Enterprises Inc. Analysis – September 2015 Update $CCE
Mead Johnson Nutrition Analysis – August 2015 Update $MJN
McCormick & Company Inc. Analysis – August 2015 Update $MKC
ConAgra Foods Inc. Analysis – August 2015 Update $CAG
Archer Daniels Midland Company Analysis – 2015 Update $ADM
J.M. Smucker Company Analysis – July 2015 Update $SJM
Keurig Green Mountain Inc. Analysis – Initial Coverage $GMCR

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

B&G Foods Analysis – June 2015 Update $BGS

bg-foods-logoB&G Foods Inc. (BGS) may intrigue many investors due to its healthy earnings growth over the last several years and a very high dividend yield. In addition, several qualitative factors make the company interesting. For example, Crunching Numbers recently wrote an article regarding the company’s acquisition strategy as a growth driver. This is a great qualitative issue to consider, but one must first look at a quantitative analysis of the company.

In fact, Benjamin Graham, the father of value investing, taught that the most important aspect to consider is whether the company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to determine a potential investment’s merits. Here’s an updated look at how B&G Foods Inc. fares in the ModernGraham valuation model.

This model is inspired by the teachings of Benjamin Graham and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor or the less conservative Enterprising Investor who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation in order to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another. By using theModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

BGS Chart

BGS data by YCharts

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Defensive Investor – Must pass at least 6 of the following 7 tests: Score = 3/7

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – FAIL
  2. Sufficiently Strong Financial Condition – Current ratio greater than 2 – PASS
  3. Earnings Stability – Positive earnings per share for at least 10 straight years – PASS
  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 one-third over the last 10 years, using three-year averages at the beginning and end of the period – PASS
  6. Moderate PEmg (price over normalized earnings) 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 – FAIL

Enterprising Investor – Must pass at least 4 of the following 5 tests tobe suitable for a Defensive Investor: 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 that 5 years ago – PASS

Valuation Summary

Key Data

Recent Price $29.80
MG Value $29.92
MG Opinion Fairly Valued
Value Based on 3% Growth $16.07
Value Based on 0% Growth $9.42
Market Implied Growth Rate 9.20%
NCAV $2.17
PEmg 26.90
Current Ratio 2.29
PB Ratio 4.73

Balance Sheet – March 2015

Current Assets $207,600,000
Current Liabilities $90,700,000
Total Debt $1,011,500,000
Total Assets $1,656,400,000
Intangible Assets $1,315,800,000
Total Liabilities $1,317,100,000
Outstanding Shares 53,800,000

Earnings Per Share

2015 (estimate) $1.44
2014 $0.76
2013 $0.98
2012 $1.20
2011 $1.04
2010 $0.67
2009 $0.44
2008 $0.27
2007 $0.54
2006 $0.42
2005 $0.29

Earnings Per Share – ModernGraham

2015 (estimate) $1.11
2014 $0.94
2013 $0.97
2012 $0.89
2011 $0.69
2010 $0.49

Dividend History

BGS Dividend Chart

BGS Dividend data by YCharts

Conclusion

B&G Foods is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned by the smaller company size, the short dividend history and the high PEmg and PB ratios, while the Enterprising Investor is only concerned with the level of debt relative to the net current assets. Therefore, all Enterprising Investors should feel very comfortable proceeding with the next stage of the analysis, which is a determination of an estimate of intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $0.69 in 2011 to an estimated $1.11 for 2015. This level of demonstrated growth is in line with the market’s implied estimate for earnings growth of 9.2% over the next 7-10 years.

The company’s recent earnings history shows an average annual growth in EPSmg of around 12.33%. The ModernGraham valuation model reduces such a rate to a more conservative figure, assuming some slowdown will occur, but still returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating B&G Foods is fairly valued at the present time.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

[/level-mg-stocks-screens-subscriber]

B&G Foods Inc. Quarterly Valuation – March 2015 $BGS

bg-foods-logo

B&G Foods Inc. should satisfy the Enterprising Investor, but not the Defensive Investor. The Defensive Investor is concerned with the low market capitalization, short dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned by the level of debt relative to the net current assets. Therefore, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $0.49 in 2010 to $0.94 for 2014. This level of demonstrated growth is in line with the market’s implied estimate for earnings growth of 10.77% over the next 7-10 years. The ModernGraham valuation model, therefore, returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating the company is fairly valued at the present time.

Be sure to check out previous ModernGraham valuations of B&G Foods Inc. (BGS) for a greater perspective!

Read the full valuation on Seeking Alpha!

BGS Chart

BGS data by YCharts

Disclaimer: The author did not hold a position in B&G Foods Inc. (BGS) at the time of publication and had no intention of changing that position within the next 72 hours. Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

B&G Foods Inc. Quarterly Valuation – December 2014 $BGS

bg-foods-logoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – December 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how B&G Foods Inc. (BGS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): B&G Foods, Inc. (B&G Foods) is a holding company whose principal assets are the shares of capital stock of its subsidiaries. The Company manufactures, sells and distributes a range of shelf-stable food and household products across the United States, Canada and Puerto Rico. Its products include hot cereals, fruit spreads, canned meats and beans, bagel chips, spices, seasonings, hot sauces, wine vinegar, maple syrup, molasses, salad dressings, Mexican-style sauces, dry soups, taco shells and kits, salsas, pickles, peppers, tomato-based products, puffed corn and rice snacks, nut clusters, Greek yogurt coated granola bars and bites and other specialty products. Some of the Company’s brands include Ac’cent, B&G, B&M, Baker’s Joy, Canoleo, Cary’s, Cream of Rice, Emeril’s, Molly McButter, Mrs. Dash, New York Style, Old London, Ortega, Pirate’s Booty, Polaner, Regina, Rickland Orchards, Sa-son, Sclafani, Spring Tree, Sugar Twin, Trappey’s, TrueNorth, Underwood, Vermont Maid and Wright’s.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 2/7

  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 – PASS
  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 – PASS
  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 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: 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

Key Data:

Recent Price $29.58
MG Value $46.25
MG Opinion Undervalued
Value Based on 3% Growth $17.42
Value Based on 0% Growth $10.21
Market Implied Growth Rate 8.06%
NCAV $2.16
PEmg 24.62
Current Ratio 2.00
PB Ratio 4.50

Balance Sheet – September 2014

Current Assets $232,100,000
Current Liabilities $116,200,000
Total Debt $1,024,700,000
Total Assets $1,698,000,000
Intangible Assets $1,321,200,000
Total Liabilities $1,344,800,000
Outstanding Shares 53,700,000

Earnings Per Share

2014 (estimate) $1.55
2013 $0.98
2012 $1.20
2011 $1.04
2010 $0.67
2009 $0.44
2008 $0.27
2007 $0.54
2006 $0.42
2005 $0.29
2004 $1.19

Earnings Per Share – ModernGraham

2014 (estimate) $1.20
2013 $0.97
2012 $0.89
2011 $0.69
2010 $0.49
2009 $0.40

Dividend History

Conclusion:

B&G Foods Inc. qualifies for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the small size, low current ratio, short dividend history, and the high PEmg and PB ratios.  The Enterprising Investor is only concerned by the high level of debt relative to the net current assets.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $0.49 in 2010 to an estimated $1.20 for 2014.  This level of demonstrated growth is greater than the market’s implied estimate of 8.06% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the price.

Be sure to check out previous ModernGraham valuations of B&G Foods Inc. (BGS) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on B&G Foods Inc. (BGS)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in B&G Foods Inc. (BGS) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

B&G Foods Inc. Quarterly Stock Valuation – September 2014 $BGS

bg-foods-logoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies for the Defensive Investor Near 52 Week Lows – September 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how B&G Foods Inc. (BGS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): B&G Foods, Inc. (B&G Foods) manufactures, sells and distributes a range of branded shelf-stable food and household products across the United States, Canada and Puerto Rico. The Company complements its branded product retail sales with institutional and food service sales and limited private labels sales. On October 31, 2012,the Company acquired New York Style, Devonsheer, JJ Flats and Old London brands from Chipita America, Inc. The Company’s Ortega brand and its products span the shelf-stable Mexican food segment including taco shells, tortillas, seasonings, dinner kits, taco sauces, peppers, refried beans, salsas and related food products. The Company new product offerings include Ortega whole grain corn taco shells and Ortega reduced sodium taco seasoning. In October 2013, B&G Foods Inc acquired Rickland Orchards LLC. In April 2014, B&G Foods Inc acquired Specialty Brands of America, Inc, and related entities from affiliates of American Capital, Ltd.
BGS Chart

BGS data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 2/7

  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 – PASS
  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 -PASS
  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 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: 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

Key Data:

Recent Price $28.52
MG Value $46.51
MG Opinion Undervalued
Value Based on 3% Growth $17.52
Value Based on 0% Growth $10.27
Market Implied Growth Rate 7.55%
NCAV $1.49
PEmg 23.61
Current Ratio 1.64
PB Ratio 4.08

Balance Sheet – 6/28/2014

Current Assets $204,800,000
Current Liabilities $124,900,000
Total Debt $1,000,300,000
Total Assets $1,707,300,000
Intangible Assets $1,357,500,000
Total Liabilities $1,331,800,000
Outstanding Shares 53,660,000

Earnings Per Share

2014 (estimate) $1.57
2013 $0.98
2012 $1.20
2011 $1.04
2010 $0.67
2009 $0.44
2008 $0.27
2007 $0.54
2006 $0.42
2005 $0.29
2004 $0.18

Earnings Per Share – ModernGraham

2014 (estimate) $1.21
2013 $0.97
2012 $0.89
2011 $0.69
2010 $0.49
2009 $0.40

Dividend History
BGS Dividend Chart

BGS Dividend data by YCharts

Conclusion:

B&G Foods Inc. qualifies for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor has numerous concerns and in fact is only pleased by the size of the company and the earnings growth over the last ten years.  The Enterprising Investor’s only initial concern is the high level of debt relative to the net current assets.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with research into the company and comparing it to other opportunities.  From a valuation perspective, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $0.49 in 2010 to an estimated $1.21 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 7.55% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the price.

Be sure to check out the previous ModernGraham valuations of B&G Foods Inc. (BGS) for more perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on B&G Foods Inc. (BGS)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in B&G Foods Inc. (BGS) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

B&G Foods Inc. Quarterly Valuation – June 2014 $BGS

bg-foods-logoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies for the Defensive Investor.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how B&G Foods Inc. (BGS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): B&G Foods, Inc. (B&G Foods) manufactures, sells and distributes a range of branded shelf-stable food and household products across the United States, Canada and Puerto Rico. The Company complements its branded product retail sales with institutional and food service sales and limited private labels sales. On October 31, 2012,the Company acquired New York Style, Devonsheer, JJ Flats and Old London brands from Chipita America, Inc. The Company’s Ortega brand and its products span the shelf-stable Mexican food segment including taco shells, tortillas, seasonings, dinner kits, taco sauces, peppers, refried beans, salsas and related food products. The Company new product offerings include Ortega whole grain corn taco shells and Ortega reduced sodium taco seasoning. In October 2013, B&G Foods Inc acquired Rickland Orchards LLC. In April 2014, B&G Foods Inc acquired Specialty Brands of America, Inc, and related entities from affiliates of American Capital, Ltd.

BGS Chart

BGS data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 2/7

  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 – PASS
  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 – PASS
  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 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: 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

Key Data:

Recent Price $33.67
MG Value $46.89
MG Opinion Undervalued
Value Based on 3% Growth $17.66
Value Based on 0% Growth $10.35
Market Implied Growth Rate 9.57%
NCAV $1.69
PEmg 27.64
Current Ratio 1.96
PB Ratio 4.80

Balance Sheet – 3/29/2014

Current Assets $185,400,000
Current Liabilities $94,600,000
Total Debt $852,200,000
Total Assets $1,483,000,000
Intangible Assets $1,161,200,000
Total Liabilities $1,106,600,000
Outstanding Shares 53,650,000

Earnings Per Share

2014 (estimate) $1.60
2013 $0.98
2012 $1.20
2011 $1.04
2010 $0.67
2009 $0.44
2008 $0.27
2007 $0.54
2006 $0.42
2005 $0.29
2004 $0.18

Earnings Per Share – ModernGraham

2014 (estimate) $1.22
2013 $0.97
2012 $0.89
2011 $0.69
2010 $0.49
2009 $0.40

Dividend History
BGS Dividend Chart

BGS Dividend data by YCharts

Conclusion:

B&G Foods is intriguing to Enterprising Investors but does not qualify for the Defensive Investor.  The Defensive Investor has some major concerns and in fact the only requirements of the investor type which the company passes are the earnings stability and earnings growth.  The Enterprising Investor, on the other hand, only has an issue with the level of debt relative to the net current assets.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $0.49 in 2010 to an estimated $1.22 for 2014.  This strong level of demonstrated growth outpaces the market’s implied estimate of 9.57% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value exceeding the market price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on B&G Foods Inc. (BGS)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Be sure to review the previous ModernGraham Valuations of B&G Foods Inc. (BGS)!

Disclaimer:  The author did not hold a position in B&G Foods Inc. (BGS) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from wikipedia; this article is not affiliated with the company in any manner.

B&G Foods Inc. (BGS) Quarterly Valuation – March 2014

bg-foods-logoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how B&G Foods fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): B&G Foods, Inc. (B&G Foods) manufactures, sells and distributes a range of branded shelf-stable food and household products across the United States, Canada and Puerto Rico. The Company complements its branded product retail sales with institutional and food service sales and limited private labels sales. On October 31, 2012,the Company acquired New York Style, Devonsheer, JJ Flats and Old London brands from Chipita America, Inc. The Company’s Ortega brand and its products span the shelf-stable Mexican food segment including taco shells, tortillas, seasonings, dinner kits, taco sauces, peppers, refried beans, salsas and related food products. The Company new product offerings include Ortega whole grain corn taco shells and Ortega reduced sodium taco seasoning. In July 2013, B&G Foods Inc announced that it has completed the acquisition of Robert’s American Gourmet Food, LLC dba Pirate Brands from VMG Partners. In October 2013, B&G Foods Inc acquired Rickland Orchards LLC.

BGS Chart

BGS data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 2/7

  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 – PASS
  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 – PASS
  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 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: 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

Key Data:

Recent Price $29.83
MG Value $37.47
MG Opinion Fairly Valued
Value Based on 3% Growth $14.11
Value Based on 0% Growth $8.27
Market Implied Growth Rate 11.07%
NCAV $1.42
PEmg 30.65
Current Ratio 1.72
PB Ratio 4.21

Balance Sheet – 12/28/2013

Current Assets $181,700,000
Current Liabilities $105,700,000
Total Debt $844,600,000
Total Assets $1,484,300,000
Intangible Assets $1,163,400,000
Total Liabilities $1,106,000,000
Outstanding Shares 53,450,000

Earnings Per Share

2013 $0.98
2012 $1.20
2011 $1.04
2010 $0.67
2009 $0.44
2008 $0.27
2007 $0.54
2006 $0.42
2005 $0.29
2004 $0.18
2003 $0.07
2002 $0.13

Earnings Per Share – ModernGraham 

2013 $0.97
2012 $0.89
2011 $0.69
2010 $0.49
2009 $0.40
2008 $0.37

Dividend History

BGS Dividend Chart

BGS Dividend data by YCharts

Conclusion:

B&G Foods is not suitable for the Defensive Investor, having only passed the investor type’s requirements regarding earnings stability and earnings growth.  The Enterprising Investor, being willing to do much more research into the company, does not have such strict requirements, and the company qualifies for further research.  As a result, Enterprising Investors should feel comfortable proceeding with their research, beginning with a review of a Glance at the Dow and 5 Low PEmg Companies for the Enterprising Investor.  From a valuation side of things, the company appears to be fairly valued.  EPSmg (normalized earnings) have grown from $0.40 in 2009 to $0.97 for 2013, a level of demonstrated growth that supports the market’s implied estimate of 11.07% earnings growth.  The ModernGraham valuation model has returned an estimate of intrinsic value that falls within a margin of safety in relation to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on B&G Foods Inc. (BGS)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

If you like our valuations, why not check out ModernGraham Stocks & Screens?  It’s a great way to review the valuations while screening for things like low PE ratio, undervalued companies, etc.!

Disclaimer:  The author did not hold a position in B&G Foods Inc. (BGS) or any of the other companies listed in this article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from the Wikipedia; this article is not affiliated with the company in any manner.

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