Health-conscious consumer behavior continues to reshape the packaged food industry, favoring brands focused on nutrition and convenience. As a result, only a limited number of companies have combined brand strength, scale, and product focus to consistently capture shifting consumer demand. In today’s FA Alpha Daily, we examine The Simply Good Foods Company (SMPL) and why its valuation may not fully reflect its exposure to these trends.
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The past several years have seen a shift in customer preferences when it comes to their food and beverage intake.
With highly processed snacks and alcoholic beverages giving way to healthier alternatives, companies that specialize in manufacturing the latter have benefitted.
And one of those firms is The Simply Good Foods Company (SMPL).
Simply Good Foods operates as a consumer-packaged foods firm that owns three brands under its portfolio.
Atkins is a brand that specializes in selling low-carb, nutritional products such as protein bars and snacks, shakes, treats, and frozen meals.
On the other hand, Only What You Need (marketed as OWYN), is a plant-based nutrition firm that sells protein shakes, protein powders, and nutrition shakes. Meanwhile, Quest Nutrition sells nutritional bars, ready-to-drink shakes, and other food items like cookies, chips, and pizza that are low in carbs and sugar.
Quest Nutrition and OWYN were strategic acquisitions made by Simply Good Foods in 2019 and 2024, respectively.
Simply Good Foods’ brand portfolio and reach have enabled it to deliver impressive results over the years.
Since 2021, the company has delivered an average Uniform return on assets of 40%. And last year, it delivered a Uniform asset growth of 13%.
Despite years of strong performance, the company only trades at a Uniform P/E of 14x, well below corporate averages.
Simply Good Foods’ P/E does not fully reflect its attractive profitability and exposure to long-term trends in health, wellness, and convenient nutrition.
As long as it maintains the strength of its branded portfolio, pricing power, and ability to position itself to take advantage of shifting consumer preferences towards health-oriented foods, this company can offer potential for equity upside.
Best regards,
Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research
at Valens Research
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