Can B&G Foods' Margin Improvement Hold Amid Soft Demand?

B&G Foods, Inc.’s BGS third-quarter fiscal 2025 results reflect a difficult operating backdrop. Net sales declined 4.7% year over year to $439.3 million, while base business net sales, excluding divestitures, fell a more moderate 2.7%. Despite lower revenue, profitability held up relatively well, with the adjusted EBITDA totaling $70.4 million and reflecting more stable base business performance when excluding the impact of divestitures.

Third-quarter segment performance was mixed. The Frozen & Vegetables business delivered a meaningful recovery, with segment-adjusted EBITDA rising to $3 million, driven by more favorable crop pack costs relative to last year’s weaker harvest and strong productivity gains at the company’s Mexico manufacturing facility. The Spices & Seasonings segment generated 2.1% net sales growth in the quarter, while tariffs continued to put pressure on costs.

At its third-quarter earnings call, B&G Foods highlighted favorable crop dynamics, productivity gains and pricing actions in the U.S. Frozen & Vegetables business. The company also made continued progress in reshaping and restructuring its portfolio during the third quarter, highlighted by the recent announcement of the divestiture of its Canadian Green Giant canned and frozen vegetables business.

Meanwhile, BGS is focused on its disciplined cost management initiatives, which include the execution of a $10 million cost savings program implemented in the back half of the year. These actions are expected to deliver an annual run rate of approximately $15 million to $20 million, driven by higher COGS productivity, improved trade and marketing spend efficiency, accelerated SG&A savings and tighter control over discretionary expenses.

Looking ahead, fiscal 2026 will likely reflect a more focused, higher-margin portfolio with reduced complexity. These actions are intended to support margin improvement and simplify the company’s operating structure.

Zacks Rundown for BGS

B&G Foods’ shares have lost 6.3% in the past six months compared with the industry’s decline of 16%. BGS currently carries a Zacks Rank #3 (Hold).

From a valuation standpoint, BGS trades at a forward price-to-earnings ratio of 8.50, lower than the industry’s average of 14.8X.

The Zacks Consensus Estimate for BGS’s current and next fiscal-year earnings implies year-over-year declines of 27.1% and about 2%, respectively.

Better-Ranked Stocks to Consider

The Simply Good Foods Company SMPL, a consumer-packaged food and beverage company, engages in the development, marketing, and sale of snacks and meal replacements, and other products in North America and internationally. SMPL currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Simply Good Foods' current fiscal-year sales implies a decline of 0.3%, and the same for current fiscal-year earnings implies growth of 1.6% from the year-ago reported figures. SMPL delivered a trailing four-quarter earnings surprise of 5.53%, on average.

United Natural Foods, Inc. UNFI distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural sports a Zacks Rank of 1.

The Zacks Consensus Estimate for United Natural’s current fiscal-year sales and earnings implies growth of 1.4% and 197.2%, respectively, from the year-ago reported figures. UNFI delivered a trailing four-quarter earnings surprise of 52.1%, on average.

McCormick & Company, Inc. MKC manufactures, markets and distributes spices, seasoning mixes, condiments and other flavorful products to the food industry. MKC currently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for McCormick's current fiscal-year sales and earnings implies growth of 1.6% and 2.4%, respectively, from the year-ago actuals. MNST delivered a trailing four-quarter earnings surprise of 2.2%, on average.

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

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