Simply Good Foods Tops Earnings and Revenue Estimates, Revises Annual Outlook

Denver, Colorado-based consumer-packaged food and beverage company, Simply Good Foods, reported better-than-expected earnings and revenue in the fiscal first quarter and lifted its fiscal 2022 guidance on topline strength.

The company that operates in the branded nutritional foods and snacking segments, offering a variety of convenient, “better-for-you” snacks, and meal replacement products reported quarterly adjusted earnings of $0.43 per share for the quarter ended in November, beating the market expectations of $0.35 per share.

The chocolate bar and candy maker said its revenue jumped over 20% to $281.3 million from a year ago. That also beat the Wall Street consensus estimates of $266.25 million.

For the fiscal year 2022, Simply Good Foods expects to grow net sales by 12-14% compared with the previous outlook of 8-10%. The full-year fiscal 2022 adjusted EBITDA to increase slightly less than net sales growth rate and anticipate adjusted diluted EPS will increase greater than the adjusted EBITDA growth rate.

However, Simply Good Foods’ shares slumped nearly 5% to $40.28 on Wednesday. The stock surged over 30% in 2021.

Analyst Comments

“Attractive end market exposure: Simply Good Foods (SMPL) is benefiting from shifting consumer preferences towards health and wellness and snacking. Strong execution: SMPL is gaining market share due to the company’s strong brand equity, marketing, and innovation initiatives,” noted Pamela Kaufman, equity analyst at Morgan Stanley.

“Quest acquisition is complementary: Quest expands SMPL’s product portfolio, customer base, innovation/marketing capabilities, and creates distribution whitespace opportunity. Valuation reflects L-T growth prospects: Current valuation at a 33% premium to packaged food peers reflects SMPL’s attractive topline/EPS growth potential.”

Simply Good Foods Stock Price Forecast

Six analysts who offered stock ratings for Simply Good Foods in the last three months forecast the average price in 12 months of $42.33 with a high forecast of $46.00 and a low forecast of $38.00.

The average price target represents a 3.18% change from the last price of $41.03. Of those six analysts, three rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $37 with a high of $49 under a bull scenario and $25 under the worst-case scenario. The firm gave an “Equal-weight” rating on the consumer-packaged food and beverage company’s stock.

Several other analysts have also updated their stock outlook. Stephens raised the price objective to $41 from $38. Stephens lifted the target price to $38 from $37. Bernstein upped the target price to $44 from $41. Jefferies increased the price target to $43 from $40.

Technical analysis also suggests it is good to buy as 100-Day Moving Average and 100-200-day MACD Oscillator signals a buying opportunity.

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