Simply Good Foods Posts Strong Q3 Results, Raises FY21 Outlook

The Simply Good Foods Company (SMPL) posted strong fiscal Q3 results, outpacing analysts’ expectations.

Following the announcement, shares of the food company closed 1.8% higher on July 1 but declined 2.1% in the extended trading session.

The company reported net sales of $284 million in fiscal Q3, which grew 32% from the year-ago period and beat revenue expectations of $244.3 million. The increase was driven by a healthy performance from Atkins and Quest.

Adjusted earnings came in at $0.43 per share, beating consensus estimates of $0.29 per share and increased 65.4% year-over-year.

The Simply Good Foods CEO Joseph E. Scalzo said, “As we discussed last quarter we do expect higher raw materials and freight costs starting in the fourth quarter and in fiscal 2022. Given the anticipated inflation next year, in June, we notified customers of our plans to institute a price increase effective in September. The price increase will enable the Company to maintain gross margin and continue to invest in initiatives that drive growth.”

Scalzo further added, “Due to our third quarter year-to-date business performance, we have increased our full year fiscal 2021 net sales, gross margin and Adjusted EBITDA outlook versus our previous forecast. Our fiscal fourth quarter is off to a good start, and we are positioned well to deliver on our plans and objectives over the remainder of the fiscal year.” (See Simply Good Foods stock chart s on TipRanks)

For Fiscal 2021, Simply Good Foods expects earnings per share to be in the range of $1.20 – $1.25. The consensus estimate for the same is pegged at $1.06 per share.

Revenues for Fiscal 2021 are expected to land in the range of $995 – $1,005 million versus prior expectations of $930 – $940 million and the consensus estimate of $947.7 million.

Following the earnings announcement, Jefferies analyst Robert Dickerson reiterated a Hold rating on the stock but increased the price target to $40.00 from $37.00. This implies 7.6% upside potential to current levels.

Dickerson commented, “Given the increased margin visibility and confidence in ongoing sales momentum, we’re upping our forecasts.”

Overall, the stock has a Hold consensus rating based on 1 Buy and 3 Holds. The average SMPL price target of $34.75 implies 6.5% downside potential from the current levels. Shares have increased 25.1% over the past six months.

Simply Good Foods scores a 7 of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market averages.