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Category: Stock Market and Simply Good Foods
Date: 11 January 2020 Stock Price: $24.02 We take a look at the 1st quarter earnings report of their 2020 fiscal year of The Simply Good Foods Company, a company whose portfolio is largely made up by nutrition bars and ready to drink shakes
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About The Simply Good Foods Company
The Simply Good Foods Company (Nasdaq: SMPL), headquartered in Denver, Colorado, is a highly-focused food company with a product portfolio consisting primarily of nutrition bars, ready-to-drink shakes, sweet and salty snacks and confectionery products marketed under the Atkins®, Quest®, SimplyProtein® and Atkins Endulge® brand names. Simply Good Foods is poised to expand its wellness platform through innovation and organic growth along with investment opportunities in the snacking space and broader food category. Simply Good Foods aims to lead the nutritious snacking movement with trusted brands that offer a variety of convenient, innovative, great-tasting, better-for-you snacks and meal replacements
Overview of Simply Good Foods' 1st quarter 2020 earnings report
- Net sales: $152.153 million (up from $120.938 million for the same quarter of the previous year)
- Net sales increased by 25.8% over the last 12 months
- Cost of sales: $89.947 million (up from $69.011 million for the same quarter of the previous year)
- Cost of sales increased by 0.89% over the last 12 months
- Net loss: -$4.793 million (down from $15.399 million for the same quarter of the previous year)
- Diluted loss per share: -$0.05 (down from $0.18 per share for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 89.708 million (up from 82.774 million for the same quarter of the previous year)
- Cash and cash equivalents: $72.711 million
- Cash and cash equivalents per share: $0.81
- Cash and cash equivalents makes up 3.38% of Simply Good Foods' market capital
- Cash and cash equivalents makes up 3.6% of Simply Good Foods' total assets
- Accounts receivable: $69.593 million
- Accounts receivable makes up 3.5 % of Simply Good Foods' total assets
- Inventories: $90.378 million
- Inventories makes up 4.5% of Simply Good Foods' total assets
- Goodwill: $567.464 million
- Goodwill makes up 28.2% of Simply Good Foods' total assets.
- Goodwill amounts to $6.32 a Simply Good Foods' stock
- Stockholders equity of Simply Good Foods: $1.183 billion
- Stockholders equity per share for Simply Good Foods' : $13.18
- So Simply Good Foods' is trading at 1.82 times it stockholders equity per share which is outside the expected range of between 2 and 4 times most companies tend to trade at.
Simply Good Foods' management commentary on the results and earnings guidance
Denver, CO, January 9, 2020 - The Simply Good Foods Company (Nasdaq:SMPL) (“Simply Good Foods,” or the “Company”), a developer, marketer and seller of branded nutritional foods and snacking products, today reported financial results for the thirteen week period ended November 30, 2019
“Simply Good Foods, first quarter results represent a good start to fiscal 2020 as we build on our strong 2019 performance,” said Joseph E. Scalzo, President and Chief Executive Officer of Simply Good Foods. “Our legacy Atkins sales and profit growth were in line with our expectations and positions us nicely to deliver on our financial commitments. We are particularly pleased with our Atkins® brand retail takeaway performance for the thirteen weeks ended December 1, 2019, which increased 10.7% in the U.S. measured channels despite a very difficult comparison in the same period a year ago. In addition to our legacy Atkins growth, Quest contributed to the increased sales and earnings and is a valuable addition to our nutritional snacking portfolio.”
"The Quest acquisition is an exciting milestone for Simply Good Foods and strengthens our leadership within the nutritional snacking category. Quest gives us valuable customer and supplier scale while also providing us with a unique brand promise and consumer target. Our branded portfolio capitalizes on the growing consumer mega-trends that include growing snacking incidence and consumer desire for health and wellness, convenience and meal replacement products. We will continue to invest in our brands and are confident in our short and long term plans to drive growth through superior brand marketing and programs, expanded distribution and new products. We remain confident in our business growth opportunities moving forward and our ability to execute against our strategic initiatives to create value for our stockholders.”
“Simply Good Foods, first quarter results represent a good start to fiscal 2020 as we build on our strong 2019 performance,” said Joseph E. Scalzo, President and Chief Executive Officer of Simply Good Foods. “Our legacy Atkins sales and profit growth were in line with our expectations and positions us nicely to deliver on our financial commitments. We are particularly pleased with our Atkins® brand retail takeaway performance for the thirteen weeks ended December 1, 2019, which increased 10.7% in the U.S. measured channels despite a very difficult comparison in the same period a year ago. In addition to our legacy Atkins growth, Quest contributed to the increased sales and earnings and is a valuable addition to our nutritional snacking portfolio.”
"The Quest acquisition is an exciting milestone for Simply Good Foods and strengthens our leadership within the nutritional snacking category. Quest gives us valuable customer and supplier scale while also providing us with a unique brand promise and consumer target. Our branded portfolio capitalizes on the growing consumer mega-trends that include growing snacking incidence and consumer desire for health and wellness, convenience and meal replacement products. We will continue to invest in our brands and are confident in our short and long term plans to drive growth through superior brand marketing and programs, expanded distribution and new products. We remain confident in our business growth opportunities moving forward and our ability to execute against our strategic initiatives to create value for our stockholders.”
Outlook
“We are pleased with our start to the year and the progress we are making against our strategic initiatives that build on our existing capabilities and strengthen our brands. Of course, one of our key goals in 2020 is the integration of Quest. I'm pleased to report that this work is well underway and progressing as planned. Collaboration of both leadership teams is excellent and gives us confidence that we will deliver on our integration plans. We have good marketplace momentum across the business and are confident in achieving our fiscal 2020 financial commitments,” Scalzo concluded. For the full year fiscal 2020, the Company updated its outlook for the acquisition of Quest and anticipates full-year net sales of $850-870 million and Adjusted EBITDA of $154-158 million.
The outlook for legacy Atkins net sales and Adjusted EBITDA growth remains unchanged from guidance provided on October 29, 2019. Recall, the Company expects legacy Atkins net sales growth for the fifty-two weeks ended August 29, 2020, to be at the high end of its long-term net sales growth target of 4% to 6% versus the fifty-three weeks ended August 31, 2019. Legacy Atkins Adjusted EBITDA is expect to grow at a somewhat higher rate than its expectation for net sales.
Additionally, the Company estimates that the extra week included in fiscal year 2019 is a headwind to year-over-year comparisons of reported legacy Atkins net sales growth in fiscal 2020 of about 2%. The Company anticipates 2020 Adjusted Diluted Earnings Per Share 2,4 to be in the range of $0.90 to $0.95. This is an increase of 17% to 23% versus Adjusted Diluted Earnings Per Share of $0.77 in 2019.
“We are pleased with our start to the year and the progress we are making against our strategic initiatives that build on our existing capabilities and strengthen our brands. Of course, one of our key goals in 2020 is the integration of Quest. I'm pleased to report that this work is well underway and progressing as planned. Collaboration of both leadership teams is excellent and gives us confidence that we will deliver on our integration plans. We have good marketplace momentum across the business and are confident in achieving our fiscal 2020 financial commitments,” Scalzo concluded. For the full year fiscal 2020, the Company updated its outlook for the acquisition of Quest and anticipates full-year net sales of $850-870 million and Adjusted EBITDA of $154-158 million.
The outlook for legacy Atkins net sales and Adjusted EBITDA growth remains unchanged from guidance provided on October 29, 2019. Recall, the Company expects legacy Atkins net sales growth for the fifty-two weeks ended August 29, 2020, to be at the high end of its long-term net sales growth target of 4% to 6% versus the fifty-three weeks ended August 31, 2019. Legacy Atkins Adjusted EBITDA is expect to grow at a somewhat higher rate than its expectation for net sales.
Additionally, the Company estimates that the extra week included in fiscal year 2019 is a headwind to year-over-year comparisons of reported legacy Atkins net sales growth in fiscal 2020 of about 2%. The Company anticipates 2020 Adjusted Diluted Earnings Per Share 2,4 to be in the range of $0.90 to $0.95. This is an increase of 17% to 23% versus Adjusted Diluted Earnings Per Share of $0.77 in 2019.
Simply Good Foods (NASDAQ: SMPL) stock price history
The image below, obtained from Google, shows the stock price history of Simply Good Foods since its listing in middle of 2017. And it's been a very good time for Simply Good Foods stockholders. At listing it was trading at around $12 a stock and its currently trading at $24.02 a stock. That's a very strong return of 100% provided by Simply Good Foods to its stockholders since its listing less than 3 years ago.
The stock of Simply Good Foods is trading at close to the mid point between its 52 week high and 52 week low which to us is an indication that the short term sentiment and momentum of Simply Good Foods is neutral
The stock of Simply Good Foods is trading at close to the mid point between its 52 week high and 52 week low which to us is an indication that the short term sentiment and momentum of Simply Good Foods is neutral
Recent coverage of Simply Good Foods Company
2The extract below shows some of the latest coverage on Simply Good Foods from Zacks.com
Simply Good Foods (SMPL - Free Report) came out with quarterly earnings of $0.22 per share, beating the Zacks Consensus Estimate of $0.21 per share. This compares to earnings of $0.18 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 4.76%. A quarter ago, it was expected that this nutritional foods company would post earnings of $0.16 per share when it actually produced earnings of $0.07, delivering a surprise of -56.25%.
Over the last four quarters, the company has surpassed consensus EPS estimates three times. Simply Good Foods, which belongs to the Zacks Food - Confectionery industry, posted revenues of $152.15 million for the quarter ended November 2019, missing the Zacks Consensus Estimate by 8.63%. This compares to year-ago revenues of $120.93 million. The company has topped consensus revenue estimates three times over the last four quarters.
Read the full article here
Simply Good Foods (SMPL - Free Report) came out with quarterly earnings of $0.22 per share, beating the Zacks Consensus Estimate of $0.21 per share. This compares to earnings of $0.18 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 4.76%. A quarter ago, it was expected that this nutritional foods company would post earnings of $0.16 per share when it actually produced earnings of $0.07, delivering a surprise of -56.25%.
Over the last four quarters, the company has surpassed consensus EPS estimates three times. Simply Good Foods, which belongs to the Zacks Food - Confectionery industry, posted revenues of $152.15 million for the quarter ended November 2019, missing the Zacks Consensus Estimate by 8.63%. This compares to year-ago revenues of $120.93 million. The company has topped consensus revenue estimates three times over the last four quarters.
Read the full article here
Simply Good Foods Company (NASDAQ: SMPL) latest stock valuation
So what is Simply Good Foods stock worth based on the release of their latest earnings report and their outlook provided. Based on their earnings report and the outlook provided our valuation model provides a target price (full value price) for Simply Good Foods' of $15.20 a stock. We therefore believe that the stock is overvalued.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $15.20. So a good entry point into Simply Good Foods' stock would be at $13.70 or below.
We expect the stock of Simply Good Foods to pull back from current levels to levels closer to our target price (full value price) in coming weeks and months.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $15.20. So a good entry point into Simply Good Foods' stock would be at $13.70 or below.
We expect the stock of Simply Good Foods to pull back from current levels to levels closer to our target price (full value price) in coming weeks and months.
Next earnings release for Simply Good Foods Company
It is expected that Simply Good Foods Company will release their 2nd quarter 2020 earnings report in early April 2020