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.


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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. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.


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
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


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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

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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.

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