Simply Good Foods Company (NASDAQ:SMPL) experienced a significant rally on Thursday following the release of its FQ1 earnings report, which prompted a surge of investor optimism. While the company’s revenue witnessed a modest decline of 2.6% year-over-year, dropping to $308.7M, it managed to narrowly exceed both adjusted EBIDA and profit estimates. The backbone of SMPL’s sales performance was the robust growth in Quest, compensating for the sluggishness in Atkins. Notably, North America sales surged by 2.6%, and international sales exhibited a 0.7% increase compared to the previous year. The gross margin stood at 37.3% of sales, compared to 36.9% the previous year, primarily attributed to reduced ingredient and packaging costs.

Seh”>Simply Good Foods (SMPL) also reaffirmed guidance for sales, forecasting an increase at the upper end of the Denver-based food company’s long-term algorithm of 4% to 6%, inclusive of the fifty-third week benefit. CEO Geoff Tanner pointed out, “We continue to anticipate solid gross margin expansion during the year and meaningful investments in marketing and growth initiatives, as well as organizational capabilities.” Furthermore, adjusted EBITDA is anticipated to rise slightly higher than the net sales growth rate in the upcoming fiscal year.

In response to the report, Jefferies opined that SMPL is well-positioned for accelerated results in the forthcoming quarters due to heightened shipment levels and expanding margins.

By 3:46 p.m., shares of Simply Good Foods (SMPL) had leaped by 8.22%, soaring to a new 52-week high of $42.99.