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Simply Good Foods (SMPL) Margin Compression And One Off Loss Challenge Bullish Growth Narratives

Simply Wall St · 2d ago

Simply Good Foods (SMPL) has just opened its 2026 financial year with Q1 results that cap a choppy run of quarterly earnings, moving from Basic EPS of US$0.41 and US$0.36 in Q3 and Q2 2025 to a loss of US$0.12 in Q4 2025, on quarterly revenue that moved between US$341.3 million and US$381.0 million over that 2025 span. Over the same period, trailing 12 month revenue ranged from about US$1.33 billion to US$1.46 billion, while trailing EPS moved between US$1.03 and US$1.47. Taken together, this sets up a picture where headline growth expectations sit alongside tighter margins and a recent one off hit to profitability.

See our full analysis for Simply Good Foods.

With the numbers on the table, the next step is to see how this mix of steady revenue, softer margins and forecast growth lines up with the most widely held narratives around Simply Good Foods and where those stories might need updating.

See what the community is saying about Simply Good Foods

NasdaqCM:SMPL Earnings & Revenue History as at Jan 2026
NasdaqCM:SMPL Earnings & Revenue History as at Jan 2026

Margins Under Pressure After 7.1% Net Profit Level

  • Over the last 12 months, Simply Good Foods generated about US$1.45b of revenue with net income of US$103.6 million, which works out to a 7.1% net profit margin compared with 10.5% a year earlier.
  • Consensus narrative leans on higher margin brands like Quest and OWYN to help, yet the recent margin slip shows a tougher backdrop:
    • Quest has already built a US$300 million salty snacks platform and OWYN is expected to contribute more as distribution and SKUs expand, which the consensus view sees as helpful for margins over time.
    • Against that, Atkins still represents about 30% of net sales and has been described in the consensus view as a drag, which lines up with the drop in trailing margin from 10.5% to 7.1% in the risk data.

Large One Off Loss Distorts Recent Earnings

  • The last 12 months include a one off loss of US$84.0 million and Q4 2025 showed a net loss of US$12.4 million on US$369.0 million of revenue, even though the trailing 12 month EPS is US$1.03.
  • Bears highlight integration and execution risks around OWYN and Atkins, and the size of that one off charge gives their concerns some ground while also limiting how far you can extrapolate the latest dip:
    • Critics point to OWYN integration risk and the need to capture synergies from fiscal 2026, and the US$84.0 million one off item in the trailing data shows how a single issue can pull net income down from levels around US$145.3 million a year earlier.
    • Bears also flag ongoing Atkins softness as a headwind to growth and profitability, which is consistent with trailing net income of US$103.6 million being below prior trailing figures that were around US$145.5 million in earlier quarters.
On top of the headline numbers, skeptics are asking whether this one off hit is a one time reset or a sign of bumpier integration ahead. 🐻 Simply Good Foods Bear Case

Valuation Tension Between P/E Of 18.9x And DCF Fair Value

  • At a share price of US$20.65, the data shows a P/E of 18.9x compared with 19.9x for the US food industry and 14.4x for peers. A DCF fair value of about US$54.85 sits well above the current price.
  • Bulls focus on forecast earnings growth of about 7.96% a year and brand mix upgrades, and the gap between price, P/E and DCF fair value is central to their argument:
    • Supporters point out that analysts expect margins to move from around 10.0% to 12.4% over the next few years and earnings to rise from roughly US$145.3 million today to about US$204.1 million, which they view as consistent with paying more than 18.9x if that plays out.
    • At the same time, the current P/E being below the broader industry but above peers, and the share price sitting well below the US$54.85 DCF fair value in the data, means the bullish view relies on that mid single digit earnings growth actually coming through after the recent 7.1% net margin.
If you want to see how optimistic investors connect this valuation gap to future brand growth and margins, 🐂 Simply Good Foods Bull Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Simply Good Foods on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

See the numbers differently? If the data is telling you another story, shape that view into your own narrative in just a few minutes with Do it your way.

A great starting point for your Simply Good Foods research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

See What Else Is Out There

Simply Good Foods is working through tighter margins, a large one off loss and questions around brand mix that keep recent earnings quality under scrutiny.

If that mix of pressure on profitability and earnings hiccups leaves you wanting something steadier, check out CTA_SCREENER_STABLE_GROWTH to focus on companies with more consistent revenue and earnings trends.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.