Sales Increase, But Margins Are Impacted
Simply Good Foods has reported a strong Q3 performance with a net sales increase of 13.8% to approximately US $381 million. The growth was primarily fueled by the integration and acquisition of OWYN into the company and solid expansion from Quest, its high-protein snack food brand.
While the top-line numbers were good, the margins were not in tune. The gross margin came down from 39.9% to 36.4%, a large drop due to the higher operating costs and inflationary pressures. While the adjusted EBITDA also increased to approximately US $73.9 million, the margin fall is also a matter of concern for investors and analysts alike.
Conagra Falls While Simply Good Foods Adapts. What’s Eating Food Companies. https://t.co/AXn3MbXVIo
— Barron’s (@barronsonline) July 10, 2025
How the Brands Are Performing
Quest is still a bright spot for the company’s portfolio. Quest expanded 11.1% in the quarter, with greater household penetration, so its base consumer is expanding.
The newly acquired plant-based protein drink company OWYN posted a robust 24.4% increase. Its ready-to-drink business is gaining momentum, with wider retail distribution.
Meanwhile, brand Atkins lost 13.2%. Distribution problems have been one of the culprits of the slowdown, although Simply Good Foods has reported that efforts are in place to re-pump growth and market momentum for the heritage brand.
Analysts Weigh In: Steady but Watchful
Analysts are split on the response to the most recent results. DA Davidson lowered its 12-month target price from what was expected previously to US$38 currently. Even with a “Neutral” rating, the company identified inflation and underperformance at Atkins as the main dampener of enthusiasm.
The other notable investment banks, including Citigroup and UBS, have been more bullish on the stock. They have price estimates of between US $40 and US $47, which means there is still room for the stock to move if business fundamentals continue to improve.
A Peek at Simply Good Foods’s Future Earningshttps://t.co/uRcPGc9p3O
Benzinga Rankings provide key metrics on any stock at any time. $SMPL is set to release its quarterly earnings report on July 10, 2025. Analysts estimate an EPS of $0.50, with investors hoping for positive…
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SMPL Stock: Where It Stands
Simply Good Foods’ stocks are trading at approximately US $32 currently, with the consensus target of approximately US $40.13. That is potential upside of almost 24%, based on targets being reached.
As for forward guidance, the company is anticipating sales to grow 8.5% to 9.5% for the full fiscal year. EBITDA will increase as well, a 4% to 5% boost being anticipated. These numbers suggest the company is going to see modest, if not lasting, growth through 2025.
Strengths Underpinning the Business
Simply Good Foods has a solid portfolio of health and wellness brands like Quest and OWYN, which are well positioned to capture evolving consumer demand for high-protein, low-carb, and functional foods.
Its finances are in great shape too. The company has brought its net debt down to around half of its EBITDA, providing it with leeway for investment and protection against short-term market volatility.
Besides, the present acceleration of Quest and OWYN provides a better buffer as the company wrestles to revive the Atkins brand. If efforts to revamp Atkins, such as overhauling packaging, rolling out new lines, and enhancing distribution, yield results, then this would be an enormous growth momentum.
Risks That Could Slow Momentum
But there are also headwinds to consider. Margin squeezes due to inflation and incremental cost of integration of acquisitions are diminishing the profitability of the company. Unless inflation subsides or supply chain costs continue to rise, this will detract from future profit.
Atkins’ underperformance is also a strategic problem. As iconic a brand as Atkins has been, it has not connected with younger consumers. Unless improvement efforts have significant impact, the brand will weigh on overall performance.
Lastly, general economic uncertainties like volatility of commodity prices, changes in eating trends, and possible tariff changes also could impact results.
The next few quarters will be instrumental in determining the tone for SMPL shares in the coming time. Margin trends will best inform the question of whether Simply Good Foods can get back on track to more positive levels of profitability. Progress here would quickly reverse the sentiment for the shares.
Atkins turnaround process will be just as noteworthy. Proof of coming back expansion or increased demand for that business could be a fine catalyst to share price appreciation.
Also, observe any shift in the attitude of analysts. If more and more companies turn conservative like DA Davidson, the stock may get stuck in the middle. But if SMPL performs better than expected, upgrades can spur investor interest again.
Last but not least, peers’ performance in the health snack and protein business, like BellRing Brands, will serve as a good reference point for evaluating SMPL’s relative competitive standing in the market.
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Final Take: Room to Grow, But Not Without Risk
Simply Good Foods seems to be at a turning point. Its acquisition of OWYN and continued success of Quest demonstrate that the company is keenly aware of what modern consumers demand. Yet profitability headwinds as well as Atkins’ deteriorating fortunes hint that the road ahead will not be smooth.
The outlook for SMPL stock remains cautiously optimistic. If the company can ease margin pressure and revive Atkins, it may reward shareholders with meaningful upside. But in the near term, expect some volatility as investors weigh margin trends and broader economic conditions.
If you’re considering investing, now’s a good time to stay tuned to earnings updates, brand performance, and any signs that margin recovery is underway.
