General Mills, Inc. (NYSE:GIS) is looking to increase revenue further in the future and is expecting revenue to cross $18 billion in the current fiscal year, driven by its acquisitions. B&G in comparison is a way smaller company with a market capitalization of not even $2 billion and it might find it difficult to compete against General Mills, as it does not have a well-trained financial muscle.
Apart from General Mills, Inc. (NYSE:GIS), B&G will also face competition from another big player in the form of The J.M. Smucker Company (NYSE:SJM), which is another player that is involved in branded food products. The J.M. Smucker Company (NYSE:SJM) has been strengthening its supply chain of late and will also be investing aggressively into its coffee and fruit spreads business. The company has outlined a $220 million investment on these initiatives in the next three years apart from investing in a food manufacturing facility in Orrville, Ohio.
This investment should help Smucker to improve its sales. The company pays a solid dividend that yields 2.1%, and a payout ratio of 41% means that there is room for the dividend to grow. Smucker is also a lot cheaper than B&G with a P/E ratio of just 23, while B&G has a rich valuation at 40 times earnings. So from an investment perspective, The J.M. Smucker Company (NYSE:SJM), with its bigger size and lower valuation is a safer bet.
B&G Foods, Inc. (NYSE:BGS) has performed well and has gained 26% this year apart from paying a good dividend. The company, although a small fish as compared to the huge General Mills, Inc. (NYSE:GIS), follows a well defined acquisition strategy to grow its business and this has yielded results so far. I am optimistic about the company’s latest acquisitions and believe that they will drive further revenue growth.
The article Inorganic Growth Is Yielding Results for This Company originally appeared on Fool.com and is written by Amal Singh.
Amal Singh has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Amal is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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