Is it too late to buy Simply Good Foods shares after spiking 15% in December?

By: Motiur Rahman
Motiur Rahman
Md Motiur is a Financial Analyst at Invezz covering the North American, European and Asian stock markets. He has… read more.
on Jan 3, 2022
  • Simply Good Foods shares spiked more than 15% last month.
  • The company is expected to report its fiscal first-quarter 2022 results on the 5th of Jan.
  • Analysts expect both revenue and earnings to post significant growth from the same quarter last year.

On Monday, Simply Good Foods Co. (NASDAQ:SMPL) shares edged slightly lower ahead of its upcoming FQ1 results. The company’s shares surged more than 15% last month, leaving little room to run at the start of the new year.

Simply Good Foods is expected to report its most recent quarterly results, on Wednesday and analysts are optimistic about its top line and bottom line. They expect the company’s earnings to grow by more than 20% from the same quarter last year to $0.35 per share.

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On the other hand, revenue forecasts indicate a year-over-year growth of 15% to $265.88 million. The stock is up nearly 40% over the last 12 months, following its end-of-year spike.

Is Simply Good Foods stock overvalued?

From an investment perspective, Simply Good Foods shares trade at a steep P/E ratio of about 102.90, making the stock too expensive for bargain hunters.

However, analysts expect its earnings per share to grow by 13.29% next year, boosting its forward P/E to a reasonable rate of 26.51.

Therefore, the stock could be a compelling option for growth investors.

Source – TradingView

Technically, Simply Good Foods shares seem to be trading within a sharply ascending channel formation in the intraday chart. However, the stock has recently pulled back to recover from overbought conditions.

Nonetheless, with shares still far from reaching oversold levels, investors could target extended pullbacks at about $40.51, or lower at $39.46, while $42.37 and $43.46 are crucial resistance levels.

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