B&G Foods (BGS)

Packaged foods company B&G Foods (NYSE:BGS) met Wall Streets revenue expectations in Q3 CY2025, but sales fell by 4.7% year on year to $439.3 million. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $1.83 billion at the midpoint. Its non-GAAP profit of $0.15 per share was 35.6% above analysts’ consensus estimates.

Company Overview

Started as a small grocery store in New York City, B&G Foods (NYSE:BGS) is an American packaged foods company with a diverse portfolio of more than 50 brands.

As America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.

Competitors in the packaged foods industry include Conagra (NYSE:CAG), General Mills (NYSE:GIS), Hormel Foods (NYSE:HRL), Kraft Heinz (NASDAQ:KHC), and McCormick (NYSE:MKC).

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $1.84 billion in revenue over the past 12 months, B&G Foods is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers.

As you can see below, B&G Foods struggled to generate demand over the last three years. Its sales dropped by 4.5% annually despite selling a similar number of units each year. We’ll explore what this means in the "Volume Growth" section.

This quarter, B&G Foods reported a rather uninspiring 4.7% year-on-year revenue decline to $439.3 million of revenue, in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to decline by 1.2% over the next 12 months. it’s tough to feel optimistic about a company facing demand difficulties.

Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.

B&G Foods’s quarterly sales volumes have, on average, stayed about the same over the last two years. This stability is normal because the quantity demanded for consumer staples products typically doesn’t see much volatility.

In B&G Foods’s Q3 2025, sales volumes dropped 2.9% year on year. This result was a reversal from its historical levels.

B&G Foods has bad unit economics for a consumer staples company, signaling it operates in a competitive market and lacks pricing power because its products can be substituted. As you can see below, it averaged a 21.9% gross margin over the last two years. Said differently, for every $100 in revenue, a chunky $78.07 went towards paying for raw materials, production of goods, transportation, and distribution.

In Q3, B&G Foods produced a 22.5% gross profit margin, in line with the same quarter last year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Although B&G Foods was profitable this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 1.8% over the last two years. Unprofitable public companies are rare in the defensive consumer staples industry, so this performance certainly caught our eye.

Looking at the trend in its profitability, B&G Foods’s operating margin decreased by 16.4 percentage points over the last year. B&G Foods’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, B&G Foods generated an operating margin profit margin of 2.5%, down 8.6 percentage points year on year. Since B&G Foods’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, and administrative overhead increased.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

In Q3, B&G Foods reported adjusted EPS of $0.15, up from $0.13 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects B&G Foods’s full-year EPS of $0.54 to grow 2%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

B&G Foods has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 7.2% over the last two years, better than the broader consumer staples sector. The divergence from its underwhelming operating margin stems from the add-back of non-cash charges like depreciation and stock-based compensation. GAAP operating profit expenses these line items, but free cash flow does not.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

B&G Foods historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 1%, lower than the typical cost of capital (how much it costs to raise money) for consumer staples companies.

Debt is a tool that can boost company returns but presents risks if used irresponsibly. As long-term investors, we aim to avoid companies taking excessive advantage of this instrument because it could lead to insolvency.

B&G Foods’s $2.07 billion of debt exceeds the $60.91 million of cash on its balance sheet. Furthermore, its 7× net-debt-to-EBITDA ratio (based on its EBITDA of $273.6 million over the last 12 months) shows the company is overleveraged.

At this level of debt, incremental borrowing becomes increasingly expensive and credit agencies could downgrade the company’s rating if profitability falls. B&G Foods could also be backed into a corner if the market turns unexpectedly – a situation we seek to avoid as investors in high-quality companies.

We hope B&G Foods can improve its balance sheet and remain cautious until it increases its profitability or pays down its debt.

It was good to see B&G Foods beat analysts’ EPS expectations this quarter. We were also glad its EBITDA outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 3% to $4.08 immediately after reporting.

Updated: December 3, 2025 at 9:40 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in B&G Foods.

We cheer for all companies serving everyday consumers, but in the case of B&G Foods, we’ll be cheering from the sidelines. To kick things off, its revenue has declined over the last three years, and analysts don’t see anything changing over the next 12 months. On top of that, B&G Foods’s declining operating margin shows the business has become less efficient, and its declining EPS over the last three years makes it a less attractive asset to the public markets.

B&G Foods’s P/E ratio based on the next 12 months is 8.3x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $4.10 on the company (compared to the current share price of $4.58).