Consumers are becoming more health-conscious with six out of ten Americans limiting processed food intake. Meanwhile, alcohol consumption among adults has fallen to 54%.

With highly-processed foods and unhealthy drinks giving way for healthier alternatives, companies that specialize in the latter have benefitted.

One of those firms is The Simply Good Foods Company (SMPL).

With a brand portfolio that’s been able to take advantage of shifting customer behaviors, the company has delivered impressive results over the past few years.

Yet despite this, it trades at a Uniform P/E of 14x, well below corporate averages and a valuation that misses the company’s ability to deliver strong returns.

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The past several years have seen a shift in customer preferences when it comes to their food and beverage intake.

In fact, it’s been reported that six out of ten Americans are limiting their intake of processed foods while another 44% are prioritizing organic foods or food items that contain less chemicals and pesticides. Meanwhile, alcohol consumption among adults has fallen to 54%.

Health-conscious consumers have turned to nutritional food items like protein bars, powders, and drinks to aid in weight loss and achieve other health-related goals.

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