On Thursday, B&G Foods (NYSE:BGS) inventory acquired an improve from Piper Sandler from Underweight to Neutral, with an elevated worth goal to $9.00 from the earlier $8.00.

The shift in score comes as B&G Foods considers divesting its Frozen & Vegetables enterprise, which accounts for roughly 20% of its income and 10% of its EBITDA. Despite the section’s declining gross sales and low margins, the analyst notes the potential sale will not be anticipated to jeopardize the corporate’s dividend.

The analyst additional elaborates that the potential proceeds from the sale, though more likely to be at modest multiples because of the section’s efficiency, might contribute to an enchancment in B&G Foods’ web debt to EBITDA ratio, assuming the funds are used for debt discount.

The agency maintains its earnings per share estimates for B&G Foods at $0.80 for 2024 and $0.87 for 2025, with a worth goal that displays roughly 10 occasions the projected 2025 earnings.

The improve to a Neutral stance is attributed to the idea that the current decline in B&G Foods’ share worth has balanced the draw back dangers. The analyst’s perspective signifies that the potential section sale, together with the present inventory valuation, has mitigated considerations over additional inventory depreciation.

B&G Foods has not but confirmed any particulars concerning the sale of its Frozen & Vegetables section. The firm’s determination to discover this selection is a part of a strategic assessment to reinforce shareholder worth, notably in mild of the challenges confronted by the underperforming division.

InvestingPro Insights

As B&G Foods (NYSE:BGS) contemplates strategic adjustments, together with the doable divestiture of its Frozen & Vegetables section, buyers are keenly observing the corporate’s monetary well being and market efficiency. According to InvestingPro, B&G Foods’ market capitalization stands at $715.41 million, with an adjusted price-to-earnings (P/E) ratio for the final twelve months as of Q1 2024 at 10.73. This determine suggests a extra favorable valuation compared to the detrimental P/E ratio presently reported. Moreover, the corporate has skilled a big return during the last week, with a 9.3% worth whole return, signaling a optimistic short-term investor sentiment.

InvestingPro Tips spotlight that B&G Foods has maintained dividend funds for 18 consecutive years, echoing the analyst’s expectation that the potential sale is not going to influence the corporate’s dividend funds. The present dividend yield is at a sturdy 8.4%, which is especially enticing to income-focused buyers. Additionally, regardless of a income decline of 5.45% during the last twelve months as of Q1 2024, the corporate’s liquid belongings exceed short-term obligations, indicating a level of monetary stability.

For these enthusiastic about a deeper evaluation, there are further InvestingPro Tips accessible, which give additional insights into B&G Foods’ monetary metrics and future outlook. To discover these helpful insights and profit from an knowledgeable funding determination, use the coupon code PRONEWS24 to get a further 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the assist of AI and reviewed by an editor. For extra data see our T&C.

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