Goodfood Market (TSE: FOOD) recently reported earnings for its third quarter of Fiscal Year 2022. The online grocery company’s earnings per share came in at -C$0.28, which was below analysts’ consensus estimate of -C$0.23. In the past nine quarters, the company has missed estimates five times.
In addition, sales decreased 38% year-over-year, with revenue hitting C$67 million compared to C$107.8 million. The revenue decrease was primarily driven by changes in customer behaviors as a result of lockdown removals.
Most importantly, gross profit decreased by 53%, which means that the company saw operating deleverage since it decreased more than revenue. Indeed, the gross profit margin contracted from 35% to 26.2%. This caused the company’s earnings to fall by C$0.25 per share versus the comparable period. Nonetheless, the stock is flat on the day so far.
Goodfood’s Quarter-Over-Quarter Results Weren’t as Bad
While these results aren’t great, there are some positives from the earnings report when looking at the numbers on a sequential basis. Profitability metrics are stabilizing in some areas and improving in others, while Goodfood experienced 41% quarter-over-quarter growth in on-demand Active Customers.
Goodfood’s net loss of C$21 million was in line with its net loss from its Fiscal Q2 2022. Its gross margin, while down year-over-year, increased 220 basis points quarter-over-quarter. Also, its adjusted EBITDA loss was C$10.6 million, better than its C$13.6 million loss in Fiscal Q2.
Investor Sentiment for Goodfood is Neutral
The sentiment among TipRanks investors is currently neutral. Out of the 543,218 portfolios tracked by TipRanks, only 0.1% hold FOOD. However, the average portfolio weighting allocated towards FOOD among those who do have a position is 4.57%. This suggests that investors of the company are quite confident about its future prospects.
In the last 30 days, 0.4% of those holding the stock decreased their positions. Nevertheless, the stock’s sentiment is in line with the sector average, as demonstrated in the following image:
Analysts are Also Neutral on Goodfood
Goodfood stock has a Hold consensus rating based on one Buy and six Holds assigned in the past three months. The average FOOD price target of C$2.54 implies 74% upside potential.
Final Thoughts: Goodfood’s Results Were Underwhelming, but There’s Hope
Goodfood saw an underwhelming quarter, as revenue declined substantially while earnings came in worse than expected. However, the company is seeing sequential improvements that can lead to it achieving its goal of profitability and growth by Fiscal H1 2023. As a result, both analysts and investors are neutral on the stock as it tries to return to growth.