The Simply Good Foods Company (SMPL): A Bull Case Theory 

We came across a bullish thesis on The Simply Good Foods Company on Value investing subreddit by RainMakerJMR. In this article, we will summarize the bulls’ thesis on SMPL. The Simply Good Foods Company’s share was trading at $18.99 as of December 2nd. SMPL’s trailing and forward P/E were 19.00 and 10.47 respectively according to Yahoo Finance.

The Simply Good Foods Company, a consumer-packaged food and beverage company, engages in the development, marketing, and sale of snacks and meal replacements, and other products in North America and internationally. Simply has emerged as a compelling investment following a recent market overreaction to its fourth-quarter earnings report. The company, owner of popular health and diet brands including Quest, OWYN, and Atkins, reported a GAAP loss per share of $0.12, driven entirely by a one-time, non-cash impairment of approximately $60 million related to a revaluation of the Atkins brand and other intangibles.

This accounting adjustment does not reflect any operational weakness, as revenue, cost of goods sold, and operating expenses remained largely in line with prior periods. Excluding the impairment, SMPL would have reported an adjusted profit of around $0.46 per share, demonstrating that the core business continues to perform robustly.

The impairment merely represents a paper reduction in asset value to align with updated market assumptions and does not impact cash flow. The company also realized $9 million in marketing savings year-over-year, underscoring efficient cost management. SMPL’s underlying profitability, healthy balance sheet, and strong brand portfolio make the recent sell-off a clear overreaction, presenting a significant opportunity for investors.

Looking ahead, the company’s OWYN brand, specializing in allergen-free protein shakes and powders, represents a substantial growth avenue alongside the established Quest and Atkins franchises. Given the resilience of its business model and the temporary nature of the accounting charge, SMPL offers a compelling risk/reward profile. The market’s mispricing of the stock provides an attractive entry point, with potential upside as investor sentiment normalizes and the underlying earnings power is recognized. For long-term investors, SMPL combines strong cash flow generation with meaningful growth potential in the health and diet food sector.

Previously we covered a bullish thesis on The Simply Good Foods Company (SMPL) by Stock Analysis Compilation in December 2024, highlighting its strategic acquisitions, asset-light model, and strong position in the healthy snacking market. The stock has depreciated approximately 51.33% since coverage due to a one-time, non-cash impairment. The thesis still stands as SMPL’s core business remains profitable. RainMakerJMR shares a similar view but emphasizes the market overreaction as a buying opportunity.

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Disclosure: None.