Can B&G Foods Achieve 20% Adjusted EBITDA Margin by Year-End?

B&G Foods, Inc. (BGS) has set a strategic objective - driving adjusted EBITDA margins to 20% by fiscal year-end 2025. This reflects an aggressive shift toward operational efficiency and a more streamlined business structure. In the second quarter of fiscal 2025, the company posted a 13.7% adjusted EBITDA margin, affected by temporary cost pressures in the frozen and vegetables segment and elevated tariff expenses.

Management expects a turnaround in the second half of fiscal 2025, banking on improved crop costs, favorable foreign exchange dynamics and productivity enhancements to generate $10 million in incremental adjusted EBITDA in the fiscal third and fourth quarters. These savings efforts are on track to deliver an annual run rate of approximately $15 million to $20 million, driven by additional productivity in cost of goods sold, trade and market spending efficiencies, accelerated SG&A savings and discretionary spending cuts.

Importantly, the U.S. frozen vegetables segment is forecasted to swing into profitability, with an expected $8 million to $10 million increase in segment adjusted EBITDA compared with last year. This improvement is driven by more favorable crop costs, foreign exchange benefits on the Green Giant business manufactured in Mexico and strong productivity gains at the Irapuato manufacturing facility.

Despite these optimistic drivers, risks remain. The largest wildcard is the tariff exposure, particularly in the Spices and Flavor Solutions unit, which accounted for approximately $1 million of the second quarter adjusted EBITDA headwinds. Currency volatility also continues to pose potential margin pressures.

Ultimately, achieving a 20% adjusted EBITDA margin will depend on the realization of cost-cutting measures, execution of planned divestitures and stabilization of volatile input costs. The company’s strategic initiatives provide a clear path toward this target, but disciplined execution in the second half of fiscal 2025 will be important to progress toward the goal.

B&G Foods’ Zacks Rank & Share Price Performance

Shares of this Zacks Rank #4 (Sell) company have risen 7% over the past three months, outperforming both the industry and the broader Consumer Staples sector, which declined 3.4% and 2.9%, respectively. However, BGS underperformed the S&P 500, which gained 12.2% over the same period.

BGS Stock's Past Three Months Performance

Is BGS a Value Play Stock?

B&G Foods currently trades at a forward 12-month P/E ratio of 7.84, which is down from the industry average of 15.38 and notably below the sector average of 15.3. This valuation positions the stock at a modest discount relative to both its direct peers and the broader consumer staples sector.

BGS P/E Ratio (Forward 12 Months)

Stocks to Consider

The Chefs' Warehouse, Inc. (CHEF) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for The Chefs' Warehouse’s current fiscal-year sales and earnings indicates growth of 6.6% and 19.1%, respectively, from the prior-year levels. CHEF delivered a trailing four-quarter earnings surprise of 11.3%, on average.

Celsius Holdings, Inc. (CELH) develops, processes, manufactures, markets, sells and distributes functional energy drinks. It flaunts a Zacks Rank #1 at present. CELH delivered a trailing four-quarter earnings surprise of 5.4%, on average.

The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year sales and earnings indicates growth of 77.7% and 54.3%, respectively, from the prior-year levels.

Laird Superfood, Inc. (LSF) manufactures and markets plant-based, natural and functional food in the United States. It has a Zacks Rank # 2 (Buy) at present. LSF delivered a trailing four-quarter earnings surprise of 11.3%, on average.

The Zacks Consensus Estimate for Laird Superfood’s current fiscal-year sales and earnings indicates growth of 21% and 23.8%, respectively, from the prior-year levels.

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This article originally published on Zacks Investment Research (zacks.com).

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