Meal-kit subscription company Goodfood Market Corp. (TSE:FOOD) reported another promising quarter, sending shares 12.1% higher today. Both Q3-2023 revenue and earnings per share beat analysts’ expectations. Revenue came in at C$42.1 million compared to estimates of C$40.78 million, and EPS of -C$0.02 was better than the -C$0.04 estimate and much better than Q2-2022’s EPS of -C$0.28.
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While revenue fell by 37% year-over-year, that’s because the company scaled down its operations to improve profitability, which has clearly worked. For instance, despite the 37% revenue drop, Goodfood’s gross profits only fell by 1.5% to C$17.3 million, for a record quarterly unadjusted gross margin of 41%. In addition, cash flow from operations came in at C$3.1 million compared to a C$13.56 million loss last year.
Importantly, the company improved its full-year forecast, mentioning that expects positive adjusted EBITDA for Fiscal 2023. For reference, Goodfood reported a record adjusted EBITDA margin (7.8%) for the quarter, with adjusted EBITDA reaching C$3 million.
Is Goodfood Stock a Buy, According to Analysts?
While there are no analyst ratings from the past three months, there were two Hold ratings assigned just over three months ago. The most recent one came from Luke Hannan of Canaccord Genuity, and he gave the stock a C$0.60 price target, implying over 17% upside potential.
The other rating comes from five-star analyst Martin Landry of Stifel Nicolaus. Landry assigned a C$0.65 price target, which implies 27.45% upside potential from here. Also, given the company’s solid results, there may be upward revisions from analysts in the coming days.
Nonetheless, the most accurate analyst covering Goodfood is Michael Glen of Raymond James, with a 67% success rate and an average return of 92.89%. Click on the image below to learn more.
