THE SIMPLY GOOD FOODS CO (NASDAQ:SMPL) – A QUALITY STOCK IN THE FOOD PRODUCTS INDUSTRY

THE SIMPLY GOOD FOODS CO (NASDAQ:SMPL) was identified as a potential quality investment through our Caviar Cruise stock screener. The company, known for its nutritional food and snacking products under brands like Atkins, Quest, and OWYN, meets several key criteria for quality investing. Below, we examine why SMPL stands out.

Strong Historical Growth

• Revenue Growth (5Y CAGR): 5.95% – Exceeds the 5% minimum threshold, indicating steady sales expansion.
• EBIT Growth (5Y CAGR): 22.45% – Well above the required 5%, showing strong profitability improvement.
• EBIT Growth Outpaces Revenue Growth: This suggests the company is becoming more efficient or benefiting from pricing power.

High Return on Invested Capital

• ROIC (Excluding Cash & Goodwill): 58.19% – Far exceeds the 15% benchmark, indicating excellent capital allocation.

Healthy Financial Position

• Debt-to-Free Cash Flow: 1.68 – A low ratio means SMPL could pay off its debt in under two years using current cash flow.
• Profit Quality (5Y Avg.): 151.58% – Significantly above the 75% threshold, reflecting strong cash conversion from net income.

Fundamental Analysis Summary

Our fundamental report assigns SMPL a score of 6 out of 10, with strengths in profitability and financial health. Key highlights:

• Profitability: High margins (Operating Margin: 16.39%, Gross Margin: 38.27%) outperform most industry peers.
• Liquidity & Solvency: Strong current ratio (4.27) and quick ratio (2.70) suggest no short-term financial stress.
• Valuation: P/E of 17.37 is reasonable compared to industry averages, though growth expectations have moderated.

For investors seeking quality stocks with solid fundamentals, SMPL presents a compelling case.

Our Caviar Cruise screener lists more quality stocks and is updated daily.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own analysis before making investment decisions.