The Simply Good Foods Company forecasted better-than-expected adjusted earnings and net sales in fiscal 2021 after 2Q (ended Feb. 27) results topped consensus estimates. Strong top-line growth, margin expansion, and cost control were the primary drivers. Shares of the food company increased 1% to close at $31.48 on April 7.
Simply Good Foods’ (SMPL) 2Q adjusted earnings rose 8.7% on a year-over-year basis to $0.25 per share and outpaced Street estimates of $0.22 per share. Net sales inched up 1.5% to $230.6 million and surpassed the consensus estimate of $230.1 million, primarily due to strong e-commerce and Quest performance.
The company’s core North America sales growth was 1% year-over-year, while international net sales advanced 1.7%. Gross margin was 39.1%, up 150 basis points. Additionally, total operating expenses decreased 5.3% to $56.9 million.
Simply Good Foods CEO Joseph E. Scalzo commented, “Our fiscal third quarter is off to a good start and we’re positioned well to deliver on our plans over the remainder of the fiscal year.” (See Simply Good Foods stock analysis on TipRanks)
For fiscal 2021, the company projects net sales and adjusted earnings to be in the range of $930-940 million and $1.07-$1.11 per share, respectively. The consensus estimates for net sales and earnings are pegged at $928.73 million and $1.03 per share, respectively.
Following the 2Q results, Jefferies analyst Robert Dickerson reiterated a Hold rating and a price target of $36 (14.4% upside potential).
Dickerson commented, “Incremental fundamentals-driven upside from here likely rest on a stronger-than-expected bounce back on Atkins, ongoing growth upside on Quest, and on accretive acquisition cash allocation, although timing remains unclear at this point, leaving the risk/reward profile balanced.”
The rest of the Street is sidelined on the stock with a Hold consensus rating, based on 4 unanimous Holds. The average analyst price target of $32.25 implies 2.5% upside potential to current levels. Shares have increased 43.6% over the past six months.
According to TipRanks’ Smart Score system, Simply Good Foods gets a 7 out of 10, which indicates that the stock is likely to perform in line with market averages.
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