We recently compiled a list of the 9 Best Pizza Stocks to Buy Now. In this article, we are going to take a look at where B&G Foods, Inc. (NYSE:BGS) stands against the other pizza stocks.
The pizza market is experiencing steady growth. IMARC Group reported in their market analysis of global Pizza market types (Vegan and Non. Vegan) that the worldwide pizza market size reached a whopping $148.6 billion in the year 2023. Looking forward, the analysts expect the market to reach a value of $222.5 billion by 2032 showcasing a compound annual growth rate of 4.45 % during the fiscal periods of 2024 to 2032.
Pizza originated in Italy and is now popular all around the world owing to its versatile taste and texture. Many factors are involved in the growth of the industry, mainly the Westernized style of living, consumers’ preference towards online food delivery, and lastly, the introduction of relatively healthy varieties like vegan, low-calorie, and gluten-free pizzas.
According to technavio’s 2024 – 2028 forecast, the frozen pizza market is projected to increase by $5.96 billion with a CAGR of 4.96% between 2023 and 2028, the high demand for frozen pizza is driven by factors such as seasonal fluctuations, consumer convenience of long-term storage time and the expansion of retail stores.
According to research, in 2019 there were more than 2,45000 pizza restaurants in the world and around 77000 in the U.S. alone. Consumer spending studies suggest that from 2004 to 2019, consumers in the U.S. spent 10 billion dollars annually on pizza delivery. However, the industry experienced vast growth after the pandemic hit in 2019 resulting in increased spending on snacks ordered by using the mobile applications of fast food chains, this trend continued in 2021 when the pizza delivery peaked at $19.8 billion. Pizza was the most ordered food across the United States and the most favored fast food among all age groups in the first quarter of 2023.
In 2022, the total number of pizza restaurants reached more than 80,000 units, an increase of 7000 units compared to the last 8 years. In 2022, the number of smaller independent restaurants was 44.6 thousand compared to 35.5 thousand chain restaurants.
Nevertheless, that same year analysts witnessed a considerable margin in the sales of pizza chain restaurants compared to sales of independent restaurants. Pizza chain sales exceeded independent units by more than $7 billion, dominating the U.S. market in 2022. Major players included Domino’s Pizza, Inc. (NYSE: DPZ), and Pizza Hut of Yum! Brands, Inc. (NYSE: YUM), and Little Caesar Enterprises Inc.
In 2022, Domino’s Pizza, Inc. (NYSE: DPZ) secured first rank based on most pizza chain distribution by number and highest annual sales figure of $8.5 billion. The Pizza Hut of Yum! Brands, Inc. (NYSE: YUM) was placed on the second spot, with a sales report of over $5.2 billion.
Pizza Industry Trends Report 2024, in this study Pizza Today, surveyed 748 pizzeria owners from across the states, the findings are that online ordering is on the rise and 24.91% of respondents are investing to improve their online ordering technology. In addition, the pizzeria owners are investing 78.21% of their advertising budget on social media apps to derive more orders.
Moreover, 65% of the business owners were optimistic that their annual sales would grow in the next 12 months, whereas 44% estimated a sales growth of 5% in 2024.
Our Methodology:
Though we compiled this list primarily with a focus on choosing pizza companies that make and deliver pizza, we also included some firms from which the pizza industry procures its raw materials and ingredients, for instance, cheese, flour, and toppings. We selected the following stocks that are popular among hedge funds, the list is compiled based on hedge fund sentiment towards each stock.
To draft this list, we have assessed Insider Monkey’s database of hedge fund sentiment of 920 elite hedge funds tracked at the end of the first quarter of 2024. We arranged the stocks in ascending order of the number of hedge fund holders in each firm.
A busy supermarket with shelves full of packaged foods.
B&G Foods, Inc. (NYSE:BGS)
Number of Hedge Fund Holders: 21
B&G Foods, Inc. (NYSE:BGS) is an American food holdings company based in New Jersey. The company’s product portfolio is divided into three main segments: Shelf-stable canned food products, frozen foods, and household commodities.
The company’s product list includes pizza crusts, spices, seasonings, Mexican-style sauces, frozen and canned vegetables, peppers, and tomato-based products among other specialties.
In Q1 of 2024, the company reported net sales of $475.2 million, though had a downfall of 7.15% year-on-year, the decrease was primarily due to the selling of its Green Giant U.S. shelf-stable product line, a decline in net pricing, the impact of product mix and decrease in unit volume. EPS was $0.18 compared to $0.3 in the Q4 2023.
Gross profit was $108.9 million for the first quarter of 2024, or 22.9% of net sales in comparison to $114.2 million for the first quarter of 2023, or 22.3% of net sales. The improvements in gross profit as a percentage of net sales and adjusted gross profit as a percentage of net sales were driven by the moderation of input cost inflation, lower transportation and warehousing costs, and lower depreciation expense.
Moreover, net interest expense dropped by $1.6 million, or 4.1% from $39.4 million in the first quarter of 2023 to $37.8 million in the first quarter of 2024. The decline was mainly attributed to lower average outstanding long-term debt and accelerated amortization of deferred debt financing costs from long-term debt prepayments in the first quarter of 2023.
The average analyst rating for B&G foods stock from 4 stock analysts is “hold”. On May 16, 2024, Micheal Lavery, an analyst from Piper Sandler firm changed the rating on the stock from ‘Sell’ to ‘Hold’, while maintaining a price target of $9. He noted that after a slide in the share price, the stock reflects better the firm’s downside risks.
Piper Sandler raised the firm’s price target on B&G Foods to $9 from $8 and kept an Underweight rating on the shares. The firm notes the company reported slightly better-than-expected Q4 results, beating Piper’s estimates on revenues and adjusted EBITDA.
According to Insider Monkey’s Q1 2024 database, 21 hedge funds were invested in the company, and Balyasny Asset Management fund had the highest share value of $11.9 million invested in B&G Foods, Inc. (NYSE:BGS).
Overall BGS ranks 8th on our list of the best pizza stocks to buy. You can visit 9 Best Pizza Stocks to Buy Now to see the other pizza stocks that are on hedge funds’ radar. While we acknowledge the potential of BGS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BGS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None. This article is originally published at Insider Monkey.