B&G Foods equity trades for~1x EBITDA

BGS: One year into the turnaround few believe will actually happen

Disclosure: As of this writing, I do not hold a position in BGS.

In early 2024, B&G Foods stood at a major strategic crossroads. As we explored in The Not So Green Giant last year, after a decade of strategic drift and mounting financial strain, B&G made a bold decision to return to its core identity… a cash-generating steward of shelf- (and working capital-) stable, low-maintenance (i.e. low capex) “center of the store” food brands. This strategic reversion began with a series of painful but necessary decisions — a 60% dividend cut, the sale of its Green Giant canned vegetable business in the US (but not the Canadian business), and a formal review of its remaining frozen vegetable portfolio — namely Green Giant frozen veggies.

The market responded with brutal skepticism with shares dropping ~30% in just two trading days following the Q1 2024 earnings call. The new narrative was pretty clear — investors saw management panic, not discipline. But for those who understood the company’s original playbook — including this author — the moves marked a calculated and long-overdue return to the capital-light, stable-margin model that had made B&G successful in the first place — stable revenues, growing dividends, and a premium P/E that helped it rinse and repeat successful center-store tuck-in M&A.

But if a turnaround is actually going to happen, then B&G is giving a masterclass in how sometimes things need to “get a lot worse before getting better.”

The stock is sitting around $4 — down almost 60% since our piece last year.

Let’s break down why…