Shares of branded foods and snacking products provider Simply Good Foods (NASDAQ:SMPL) are rising in the early session today after the company announced results for its first quarter. Despite a 2.6% year-over-year increase, revenue of $308.7 million came in marginally lower than the anticipated $309.26 million figure. EPS of $0.43, on the other hand, outpaced expectations by $0.03.
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During the quarter, sales gains were driven by volume growth at Quest. However, the company experienced softness in the performance of its Atkins offerings. Further, the total retail takeaway for the 13 weeks ending November 26, 2023, rose by 7.1% in the U.S. Additionally, the combined retail takeaway for Quest soared by 19% in Q1.
While lower ingredient and packaging costs helped the company expand its gross margin by 40 basis points to 37.3%, its net income remained essentially flat at $35.6 million due to higher operating expenses. Still, SMPL is witnessing positive momentum and has reaffirmed its outlook for Fiscal Year 2024. Net sales for the year are anticipated to rise at the higher end of the 4% to 6% range. Adjusted EBITDA is seen increasing at a slightly higher pace than the net sales growth rate.
Is SMPL a Good Stock?
Overall, the Street has a Moderate Buy consensus rating on Simply Good Foods. Following a nearly 8% gain in the company’s share price over the past six months, the average SMPL price target of $41 implies a modest 3.6% potential upside in the stock.
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