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Strategies & Market Trends : Value Investing

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To: E_K_S who wrote (60443)	3/2/2018 7:02:21 AM
From: Spekulatius	Read Replies (1) of 78774

BGS - I looked at them and there are some negatives. Their debt/ EBITDA is about 5.8x, which is high. They project an ~10% EBITDA rise in Y2018, but their EBITDA for Q4 2017 was actually down. Their gross margin was down as well, due to the cost pressures mentioned. I don’t have a good idea how they are going to turn the margin trend around in short order based on the CC. They don’t really seem to have a strong plan other than hoping that the prices increases to their products stick. I am not surprised the stock is down after the earnings release. I also don’t like how they anchor around the dividend. I have bad experiences with stocks that are anchored around the dividend,e specially in conjunction with a highly leveraged balance sheet. That said, they do own some good brands. Stock trades at 10x EBITDA/EV, which reasonable. I am inclined to start a position, despite the warts mentioned above. Other packaged goods producers have issues with margins too, so it’s a bit of an industrywide problem. Those may take a while to get resolved.

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