Is Simply Good Foods Stock Too Cheap to Pass Up?

Simply Good Foods (SMPL 3.27%) is one of those companies you run into more often than you think. The bars are common in any health center or aerobics hall, and strong sellers in e-commerce channels.

At the same time, something's missing. As of June 16, the stock is down 62% over the past year. Its earnings reports have been a mixed bag, and the misses against Wall Street's revenue estimates have been painful in recent years.

Simply Good Foods is trading in Wall Street's bargain bin. Is the company set up for a lucrative turnaround?

The Atkins brand needs a protein boost

Let's start with last month's Q2 2026 report. Simply Good Foods fell short on the top line by a wide margin. Moreover, management provided next-quarter revenue guidance far below the Street consensus at the time.

The company stepped down an ambitious marketing and discount program for the Atkins brand, setting it up for difficult comparisons. The lower ad budget was based on weaker consumer interest in the Atkins message, which promotes a low-carb and high-protein lifestyle like the namesake diet. Simply Good Foods will continue to "right-size" its Atkins advertising for the rest of 2026.

GLP-1 drugs like Ozempic aren't helping the weight-loss focus of Atkins, either.

"Our research clearly shows an opportunity to position Atkins as an ally to consumers using or coming off of these drugs," CEO Geoff Tanner said on the Q2 earnings call. The company is viewing Atkins products as a complement to other weight-loss products, not a comprehensive solution. This plan sounds difficult.

A bargain-bin price with some strings attached

At 7.1 times forward earnings and 7.8 times free cash flow, Simply Good Foods is priced like a clearance-rack item. But Atkins doesn't have to perk up right away.

The 2024 acquisition of OWYN ("only what you need") is already paying off. OWYN sales rose 52% year over year. If management can stabilize Atkins while the OWYN and Quest segments keep growing, the turnaround math solves itself.

Here's the catch: recent quarters haven't inspired much confidence in a smooth turnaround. Short interest has climbed to 8.2% of float, up from 4.8% a year ago. That's unusual and troubling for a stock in freefall.

Simply Good Foods may deserve a place in a diversified portfolio, but as a smaller, speculative position.