B&G Foods has gotten torched over the last six months - since January 2025, its stock price has dropped 31.9% to $4.48 per share. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation.
Is now the time to buy B&G Foods, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think B&G Foods Will Underperform?
Despite the more favorable entry price, we don't have much confidence in B&G Foods. Here are three reasons why there are better opportunities than BGS and a stock we'd rather own.
1. Revenue Spiraling Downwards
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. B&G Foods struggled to consistently generate demand over the last three years as its sales dropped at a 3.3% annual rate. This was below our standards and signals it’s a low quality business. 
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 30.8% 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
As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.
B&G Foods’s $2.01 billion of debt exceeds the $61.24 million of cash on its balance sheet. Furthermore, its 7× net-debt-to-EBITDA ratio (based on its EBITDA of $279.5 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 doesn’t pass our quality test. After the recent drawdown, the stock trades at 6.5× forward P/E (or $4.48 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better stocks to buy right now. Let us point you toward an all-weather company that owns household favorite Taco Bell.
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