Categories Analysis, Consumer

After a strong year, Simply Good Foods stays on the right track

The portfolio of Simply Good Foods consists of nutrition bars, ready-to-drink shakes, and confectionery products that are in high demand

The Simply Good Foods Company (NASDAQ: SMPL) operates as a producer and distributor of nutritional food products and snacks. The company’s performance was very encouraging last year, with financial results mostly beating Wall Street’s estimates.

Right Strategy

Since the COVID-19 outbreak, consumers have been facing difficulties due to lack of access to healthy food and health supplements. Simply Good Foods is using its marketing skills to push products to consumers who are inclined towards eating healthy food. The latest advertising campaign aims at promoting the Atkins brand as a better, healthier alternative to at-home snacks. It also targets those who are trying to slim down after gaining weight during the pandemic.

The focus is on targeting those who are spending more time at home as a result of remote work, a strategy that helps in channelizing marketing spend in the right direction. The company’s long-term debt is high, but it remained profitable throughout last year in spite of the pandemic. It would be in a very comfortable financial position if the new marketing strategy works as per plan.

Cheering Shareholders

In the first quarter of 2021, adjusted earnings per share increased to $0.29 from $0.22. Unadjusted net income was $22.5 million, versus a net loss of $4.8 million last year. First-quarter revenues of $231.15 million surpassed the consensus estimate by 10.66%. The company topped earnings expectations three times in fiscal 2020.

“We have two large scale brands in Atkins and Quest with meaningful consumer benefits and broad appeal among two different consumer targets. Furthermore, we have demonstrated the marketing capabilities to grow new loyal consumers over time. We benefit from long-term compelling, consumer megatrends of snacking, health and wellness, convenience, and on-the-go nutrition,” said Joseph Scalzo, chief executive officer of Simply Good Foods, while commenting on the first-quarter results earlier this month.


Simply Good Foods Q1 2021 Earnings Call Transcript


Over the last 52 weeks, Simply Good Foods’ average share price increased by 31.1%. In the last three years, the value grew consistently from the preceding 52-week periods, clearly indicating that the stock has huge growth potential in the long run.

Is SMPL a Wise Bet?

The portfolio of Simply Good Foods consists of nutrition bars, ready-to-drink shakes, and confectionery products which are in huge demand across the U.S. Also, with earnings and revenue projected to grow in double digits in fiscal 2021, the stock currently offers a good entry opportunity. The guidance for the first half looks very promising, with net sales projected in the $455-465 million range and adjusted EBITDA in the $85-90 million range.

Looking for more insights?

Read the full conference call transcript here. It’s free!

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