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B&G Foods (BGS) to Report Q4 Earnings: What's in Store?

B&G Foods Inc.BGS is set to report fourth-quarter fiscal 2016 results on Feb 23, after the market closes .

Last quarter, this NJ-based shelf-stable and frozen food company posted a positive earnings surprise of 7.69%. The company has missed estimates in only one out of the past four quarters, resulting in an average positive surprise of 12.2%.

Let's see how things are shaping up for this announcement.

Factors to Consider

Acquisitions have been a key growth driver for B&G Foods. The company actively pursues acquisitions which are appreciated by investors from time to time. Since the IPO pricing of $13 a share in 2007, the company has touched around $52, indicating an increase of 4 times.

In Dec 2016, B&G Foods took over Victoria Fine Foods Holding Company and Victoria Fine Foods, LLC, for roughly $70 million in cash. This follows the acquisition of the spices and seasonings business of ACH Food Companies, Inc. in Nov 2016. These acquisitions can be expected to contribute significantly to the soon-to-be-reported quarter.

Revenues in third-quarter fiscal 2016 jumped 49.2% year over year on strong sales at Green Giant, which was taken over in Nov 2015. The company believes that Green Giant, through a new product innovation, will drive the brand going forward. B&G Foods expects incremental net sales in fiscal fourth quarter for the new items to be in the range of $6-$8 million.

However, the North American food industry has been witnessing sluggish growth and slowdown in consumption for the last few quarters due to a soft consumer spending environment. Despite the improvement in economic growth, consumers are increasing their spending modestly, as the surge in job growth is yet to translate into significantly higher wages.

Notably, for fiscal fourth quarter, the Zacks Consensus Estimate is pegged at 41 cents, down 4.65% year over year. Meanwhile, the estimate for revenues is $431.75 million, implying a 26.1% increase.

Earnings Whispers

Our proven model does not conclusively show that B&G Foods will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP is -2.44% as the Most Accurate estimate is 40 cents, while the Zacks Consensus Estimate is pegged higher at 41 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

B&G Foods, Inc. Price and EPS Surprise

B&G Foods, Inc. Price and EPS Surprise | B&G Foods, Inc. Quote

Zacks Rank: Though B&G Foods' Zacks Rank #3 increases the predictive power of ESP, the company's negative ESP makes surprise prediction difficult. You can see the complete list of today's Zacks #1 Rank stocks here .

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Peer Releases

Mondelez International, Inc. MDLZ reported fourth-quarter 2016 results, wherein earnings and revenues missed the Zacks Consensus Estimate. The underperformance was mainly due to a stronger dollar that impacted sales outside the U.S.

The Hershey Company's HSYfourth-quarter 2016 earnings beat the Zacks Consensus Estimate while sales missed the same. Earnings benefited from higher sales in North America. Hershey's fourth-quarter adjusted earnings per share of $1.17 also beat the year-ago profit of $1.08 by 8.3%.

J&J Snack Foods Corp. JJSF , a leading snack food provider, reported first-quarter fiscal 2017 earnings of 72 cents per share, surpassing the Zacks Consensus Estimate of 64 cents by 12.5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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