Summary
- B&G Foods is seeing rough times again amidst lack of sales growth and margin pressure.
- The company has returned to dealmaking but for once seems to be disciplined, at least considering the sales multiple.
- While expectations are low and they yield is high, so is leverage as I am not yet compelled to buy the shares, with the entire sector on sale.
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In September of last year, I last looked at B&G Foods (BGS) in an article named: ''A sale, for once.'. The company sold its Pirate business to Hershey (HSY) at a multiple at which I have been impressed, allowing the company to reduce leverage. I approved the more cautious route of management, yet found that B&G was still very leveraged amidst a high payout ratio.
The $420 million in gross proceeds received in connection to the deal are now being put to use (partially) to not just please investors with continued and non-sustainable dividends, yet with another acquisition as well. I was impressed with the sale not just because it was a sale, but because the company made more than twice its money in the period of just about 5 years, after it bought the company back in 2013 at $195 million.
