B&G Foods has gotten torched over the last six months - since March 2025, its stock price has dropped 37.6% to $4.62 per share. This was partly due to its softer quarterly results and might have investors contemplating their next move.
Is there a buying opportunity in B&G Foods, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Do We Think B&G Foods Will Underperform?
Even though the stock has become cheaper, we're cautious about B&G Foods. Here are three reasons why BGS doesn't excite us and a stock we'd rather own.
1. Revenue Spiraling Downwards
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. B&G Foods struggled to consistently generate demand over the last three years as its sales dropped at a 3.9% annual rate. This wasn’t a great result and is a sign of poor business quality.
2. EPS Trending Down
We track the change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sadly for B&G Foods, its EPS declined by 27.2% annually over the last three years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.
3. High Debt Levels Increase Risk
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 $1.99 billion of debt exceeds the $54.08 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.
Final Judgment
B&G Foods falls short of our quality standards. Following the recent decline, the stock trades at 7.7× forward P/E (or $4.62 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are more exciting stocks to buy at the moment. We’d suggest looking at the most dominant software business in the world.
Stocks We Would Buy Instead of B&G Foods
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