The Simply Good Foods Company (NASDAQ: SMPL) is scheduled to report its earnings results for the third quarter of 2019 on Tuesday before the market opens. The nutritional foods and snacking products developer’s results will be benefited by the successful execution of its annual plan as well as its strategic initiatives.
The top line will be driven by a lower frequency of bar promotions as well as the shift in price related to customer activity. However, the company will face an increase in marketing expenses as well as general and administrative expenses for the quarter. Simply Good Foods experienced a good start in its third quarter backed by its advertising and marketing, which continues to drive strong volume growth and improved customer inventory levels.
The top line growth is expected to underscore the strength and resilience of its brand against large consumer target that includes both core programmatic weight loss consumers as well as lifestyle-oriented low carbers. It is expected that the growth will continue to be well balanced across all product forms.
Analysts expect the company’s earnings to jump by 40% to $0.14 per share and revenue to increase by 12.30% to $120.39 million for the third quarter. In comparison, during the previous year quarter, Simply Good Foods posted a profit of $0.10 per share on revenue of $107.23 million. The company has surprised investors by beating analysts’ expectations thrice in the past four quarters.
For the second quarter, the company reported a 69% dip in earnings as the previous year included one-time gain related to the re-measurement of deferred tax liabilities and gain on the fair value of the tax receivable agreement. The company experienced an increase in television media and e-commerce investments as well as higher professional fees, investments, and greater incentive compensation. Net sales grew by 13.2% on volume growth.
The company is more optimistic than last quarter in its ability to exceed its long-term net sales growth target of 4% to 6% given the strength and momentum of the business in the first half of the year. Specifically, Simply Good Foods anticipates 2019 net sales and adjusted EBITDA to both increase double digits, on a percentage basis versus last year.
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This outlook reflects anticipated solid volume growth and the benefit of a fifty-third week, as well as incremental strategic investments in marketing and brand building initiatives that should continue to drive growth over the long term. Simply Good Foods continued to expand adjusted EBITDA margin while also making investments in marketing and organizational capabilities that it believes will benefit the company in the near and long term.
Shares of Simply Good Foods ended Friday’s regular session up 2.03% at $24.08 on the Nasdaq. The stock has risen over 62% in the past year and over 14% in the past three months.
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