Simply Good Foods stock prediction as FQ3 results exceed expectations

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 22, 2021
  • Simply Good Foods shares on Friday spiked nearly 7% after releasing its fiscal third-quarter results.
  • The company reported its most recent quarterly results before markets opened, beating analyst estimates.
  • The stock now trades at a steep P/E ratio of 56.07.

On Friday, the Simply Good Foods Co. (NASDAQ:SMPL) stock spiked nearly 7% after announcing solid fiscal third-quarter results. The company reported its most recent quarterly revenue and earnings before markets opened, surpassing analyst expectations. 

The company posted fiscal Q3 non-GAAP earnings per share of $0.29, beating the average for analyst expectations of $0.25. However, SMPL’s GAAP EPS of $0.19 fell short of the Street forecast of $0.24.

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On the other hand, revenue for the quarter increased by 16.9% from the same quarter a year ago to $269.5 million, exceeding analysts estimates by 3.9%.

Simply Good Food shares are up more than 23% this year and nearly 75% over the last 12 months.

Is SMPL a growth stock?

From a valuation perspective, the snack making company’s shares trade at a steep P/E ratio of 56.07, making the stock less attractive to value investors. 

However, analysts expect its earnings per share to grow by a whopping 313.5% this year, before rising at an average annual rate of 18.5% over the next five years.

Therefore, although the SMPL stock seems expensively valued, its growth prospects make it a compelling option for long-term investors.

Source – TradingView

Technically, Simply Good Foods shares appear to have recently spiked, completing an upward breakout from a descending channel. As a result, the stock now trades above the 100-day moving average in the intraday chart.

However, with shares yet to reach overbought conditions, the current rally could continue to the foreseeable future. Therefore, investors could target extended gains at about $37.58, or higher at $38.54.

On the other hand, if the stock pulls back as profit-takers swoop in, it could find support at $35.51, or lower at $34.45.

It may not be too late to buy SMPL

In summary, although the Simply Good Foods stock seems to have skyrocketed pushing its P/E ratio higher, the stock is yet to reach overbought conditions, thus leaving room for more upward movements. 

Moreover, its exciting growth prospects could gain the attention of long-term investors.

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