Meal-kit subscription company Goodfood Market Corp. (TSE:FOOD) just reported promising Fiscal Q1-2023 results despite missing estimates. The company is going through a major turnaround, and it seems to be going well so far. Last year, Goodfood outlined its plans to return to adjusted-EBITDA profitability by 2023 via cost-cutting and scaling down its operations. Now, it looks like profitability is right around the corner.
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For the quarter ended December 3, 2022, Goodfood’s adjusted EBITDA was -C$2 million, a large improvement from -C$15 million in the same period last year. Notably, the company reiterated its forecast of being adjusted-EBITDA profitable by Fiscal Q2 2023 due to an improving gross profit margin — which came in at 35.6% compared to 24.0% last year — and cost-cutting measures.
While Goodfood’s earnings per share came in at -C$0.16 compared to estimates of -C$0.07, the loss was much lower than last year’s -C$0.29. Importantly, C$2 million of its C$12 million net loss was due to non-recurring expenses. Further, adjusted cash flow from operations was -C$4 million compared to -C$19 million last year.
Meanwhile, however, FOOD’s net sales came in at C$47.1 million (estimates were C$47.3 million) compared to C$77.8 million in last year’s Q1. Nonetheless, this was expected due to Goodfood’s return-to-profitability measures, which included phasing out its on-demand delivery service. Goodfood is returning to its roots of being a meal-kit company, focusing on higher-margin revenues, and this should help the stock in the long term.
Is Goodfood Stock a Buy, According to Analysts?
Analysts currently have a Moderate Sell consensus rating on FOOD stock based on three Holds and two Sells assigned in the past three months. The average Goodfood stock price target of C$0.43 implies 24.6% downside potential. However, analyst upgrades could come in as the company cuts its expenses further.
The Takeaway
While Goodfood missed revenue and EPS expectations, the overall numbers are heading in the right direction. Therefore, it’s likely that Goodfood can achieve a positive adjusted EBITDA by Fiscal Q2. If it does, the stock could rise from the ashes.
