Why B&G Foods (BGS) Was Downgraded

Story updated at 9:50 a.m. with market information.

NEW YORK (TheStreet) -- B&G Foods (BGS) was downgraded to "neutral" from "overweight" by Piper Jaffray Thursday.

Shares of B&G Foods fell 7.7% to $28.34 in morning trading.

The analyst firm set a price target of $30 for the company. Piper Jaffray said the company is facing "operating and integration challenges."

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Separately, TheStreet Ratings team rates B&G FOODS INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate B&G FOODS INC (BGS) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 0.5%. Since the same quarter one year prior, revenues rose by 17.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 132.70% to $27.22 million when compared to the same quarter last year. In addition, B&G FOODS INC has also vastly surpassed the industry average cash flow growth rate of 0.61%.
  • B&G FOODS INC's earnings per share declined by 17.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, B&G FOODS INC increased its bottom line by earning $1.21 versus $1.03 in the prior year. This year, the market expects an improvement in earnings ($1.49 versus $1.21).
  • 35.77% is the gross profit margin for B&G FOODS INC which we consider to be strong. Regardless of BGS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.46% trails the industry average.
  • In its most recent trading session, BGS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.
  • You can view the full analysis from the report here: BGS Ratings Report

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