What Happened?

Shares of packaged food company Simply Good Foods (NASDAQ: SMPL) jumped 3.1% in the afternoon session after the stock rebounded as it hit a 52-week low in the prior session. 

The bounce follows a challenging period for the packaged food company, known for its Atkins brand, which saw its stock touch a new 52-week low of $27.00. The recent downward pressure has been accompanied by a bearish outlook questioning the company's fundamentals. An analysis pointed to concerns including its relatively small-scale operations, estimated sales growth slowing to 1.4% for the next twelve months, and a decrease in its free cash flow margin. Despite the gain, the stock has declined significantly over the past year.

After the initial pop the shares cooled down to $27.07, up 3.6% from previous close.

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What Is The Market Telling Us

Simply Good Foods’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 6 days ago when the stock dropped 2.6% on the news that markets pulled back, reversing early gains, as investor sentiment remained cautious despite a softer-than-expected inflation reading. 

Stocks rose in the morning session after an unexpected drop in the Producer Price Index (PPI) for August signaled easing inflation and raised expectations for a potential Federal Reserve interest rate cut. The U.S. Bureau of Labor Statistics reported that the PPI, which measures wholesale prices, edged down 0.1% last month, contrary to analyst expectations for a 0.3% rise. This data gives the Federal Reserve more flexibility to consider lowering interest rates to stimulate the economy.

Simply Good Foods is down 30.6% since the beginning of the year, and at $27.07 per share, it is trading 32.3% below its 52-week high of $40.01 from November 2024. Investors who bought $1,000 worth of Simply Good Foods’s shares 5 years ago would now be looking at an investment worth $1,190.

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