SunOpta (STKL) AI Stock Analysis

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SunOpta

(NASDAQ:STKL)

54Neutral

SunOpta shows positive signs of recovery with revenue and cash flow improvements. However, profitability challenges and high leverage pose risks. Technical indicators suggest bearish momentum, and the valuation reflects current unprofitability. The earnings call provided optimistic guidance, though operational challenges remain.

Positive Factors

Growth Potential

SunOpta's growth potential is identified as a compelling aspect for investors.

Operational Efficiency

Efficiencies in manufacturing processes are expected to benefit margins and return on invested capital in the future.

Revenue Growth

SunOpta continues to be a supplier of choice for the on-trend plant-based space, and this momentum is expected to continue into 2025, with revenue guidance calling for growth of 7-11%.

Negative Factors

Depreciation Impact

Gross margin of 10.3% was slightly below our 15.3% estimate due to additional depreciation from newly launched production assets, along with short-term investments aimed at enhancing long-term supply chain efficiency.

Gross Margin Concerns

Q4's modest upside to revenue & EBITDA was overshadowed by lighter gross margin, including growth investments & temporary supply chain dislocation, and lighter FY25 guidance for revenue and EBITDA.

Guidance Concerns

FY25 EBITDA guidance is viewed as lighter than expected and requires further exploration.

SunOpta (STKL) vs. S&P 500 (SPY)

Market Cap

$475.43M

Dividend YieldN/A

Average Volume (3M)940.39K

Price to Earnings (P/E)―

Beta (1Y)1.13

Revenue Growth-5.50%

EPS Growth89.98%

CountryUS

Employees1,248

SectorConsumer Defensive

Sector Strength90

IndustryPackaged Foods

Share Statistics

EPS (TTM)-0.15

Shares Outstanding119,754,850

10 Day Avg. Volume974,596

30 Day Avg. Volume940,391

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.84

Price to Cash Flow (P/CF)4.60

P/FCF Ratio4.40

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$10.25

Price Target Upside161.48% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering5

SunOpta Business Overview & Revenue Model

Company DescriptionSunOpta Inc. (STKL) is a leading company in the health and wellness sector, focusing on the development, production, and distribution of plant-based and organic food products. The company operates primarily in two segments: Plant-Based Foods and Beverages, and Fruit-Based Foods and Beverages. Its core products include plant-based beverages, snacks, and frozen fruit, catering to a growing consumer demand for sustainable and healthy food options.

How the Company Makes MoneySunOpta makes money through the sale of its diverse range of plant-based and fruit-based food and beverage products. The company generates revenue by supplying both retail and foodservice markets, leveraging its extensive distribution network. Key revenue streams include private label products, co-manufacturing services, and branded product offerings. SunOpta also benefits from strategic partnerships with retailers and foodservice providers, which enhance its market reach and customer base. Additionally, the company's focus on innovation and sustainable practices helps attract a loyal customer following, contributing significantly to its earnings.

SunOpta Financial Statement Overview

Summary

SunOpta's financial statements reflect a company in recovery with improving revenue and cash flow yet struggling with profitability and high leverage. The income statement shows positive growth trends, while the balance sheet indicates potential risks due to high debt levels. Cash flow improvements are notable, enhancing liquidity despite net losses.

Income Statement

Positive

SunOpta has shown a positive revenue growth of 14.85% from 2023 to 2024, indicating a strong recovery from previous declines. However, the company still faces profitability challenges, as reflected in its negative net income and net profit margin. The gross profit margin improved slightly to 13.31% in 2024, and EBIT margin increased to 2.15%, showing better operational efficiency.

Balance Sheet

Neutral

The company has a high debt-to-equity ratio of 1.06 in 2024, suggesting significant leverage which could pose financial risks. The equity ratio of 22.23% indicates a moderate level of equity relative to total assets. Return on equity remains negative due to negative net income, impacting overall financial health.

Cash Flow

Positive

SunOpta improved its free cash flow from negative in 2023 to positive in 2024, reflecting better cash management. Operating cash flow to net income ratio of -3.01 in 2024 shows reliance on non-operating factors to generate cash. While free cash flow to net income ratio is 1.17, signaling better cash availability against negative net income.

Dec 2024	Dec 2023	Dec 2022	Mar 2022	Mar 2021
Breakdown
Income Statement		Total Revenue
723.73M	630.30M	934.66M	812.62M	789.21M
	Gross Profit
96.30M	88.62M	122.85M	98.08M	109.08M
	EBIT
15.59M	8.27M	1.13M	2.37M	-12.72M
	EBITDA
15.59M	38.22M	41.31M	36.08M	11.16M
	Net Income Common Stockholders
-17.39M	-175.02M	-9.52M	-4.14M	-47.30M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.55M	306.00K	679.00K	227.00K	251.00K
	Total Assets
668.53M	669.42M	855.85M	755.12M	585.62M
	Total Debt
156.89M	379.14M	399.12M	275.83M	107.06M
	Net Debt
155.33M	378.83M	398.44M	275.61M	106.80M
	Total Liabilities
519.93M	493.89M	508.58M	421.99M	252.69M
	Stockholders Equity
148.59M	175.53M	347.27M	333.13M	332.93M
Cash Flow		Free Cash Flow
20.41M	-31.28M	-68.05M	-104.80M	66.94M
	Operating Cash Flow
52.34M	14.84M	60.58M	-21.43M	91.70M
	Investing Cash Flow
-18.68M	44.03M	-106.82M	-94.45M	324.52M
	Financing Cash Flow
-31.09M	-50.80M	46.70M	115.86M	-417.68M

SunOpta Technical Analysis

Technical Analysis Sentiment

Negative

Last Price3.92

Price Trends

50DMA

6.13

Negative

100DMA

6.87

Negative

200DMA

6.43

Negative

Market Momentum

MACD

-0.47

Positive

RSI

20.09

Positive

STOCH

7.09

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STKL, the sentiment is Negative. The current price of 3.92 is below the 20-day moving average (MA) of 4.95, below the 50-day MA of 6.13, and below the 200-day MA of 6.43, indicating a bearish trend. The MACD of -0.47 indicates Positive momentum. The RSI at 20.09 is Positive, neither overbought nor oversold. The STOCH value of 7.09 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STKL.

SunOpta Risk Analysis

SunOpta disclosed 43 risk factors in its most recent earnings report. SunOpta reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

SunOpta Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
INGR	74 Outperform	$8.40B	13.47	17.62%	2.41%	-8.95%	1.35%
SENEA	71 Outperform	$595.79M	15.17	6.35%	―	4.01%	22.46%
Sector *	62 Neutral	$19.87B	13.65	-16.14%	3.29%	1.16%	3.90%
STKL	54 Neutral	$475.43M	―	-6.77%	―	-5.50%	89.98%
THS	54 Neutral	$1.30B	44.65	1.67%	―	-4.59%	-42.81%
HAIN	44 Neutral	$339.33M	―	-19.41%	―	-6.68%	-9.71%

* Consumer Defensive Sector Average

Performance Comparison

STKL

SunOpta

3.92

-2.71

-40.87%

SENEA

Seneca Foods

83.23

27.25

48.68%

HAIN

Hain Celestial

3.41

-3.32

-49.33%

THS

TreeHouse Foods

22.34

-15.18

-40.46%

INGR

Ingredion

123.22

12.82

11.61%

SunOpta Earnings Call Summary

Earnings Call Date: Feb 26, 2025 | % Change Since: -46.96% | Next Earnings Date: May 7, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong revenue and volume growth, improved adjusted EBITDA, and successful completion of the Midlothian startup, coupled with debt reduction and strong cash flow generation. However, challenges included a decline in gross profit margin, operational downtime at Midlothian, and a reported loss from continuing operations. The sentiment is balanced with positive growth momentum and operational challenges.

Highlights

Strong Revenue and Volume Growth

Revenue increased by 9% in Q4 2024, driven by a 13% volume growth. Overall, 2024 saw a 21% increase in volume, indicating significant growth across segments and customers.

Adjusted EBITDA Improvement

Adjusted EBITDA increased by 20% in Q4 2024. The EBITDA margin improved by 130 basis points to 13.4%, supported by strong revenue growth and operational efficiencies.

Successful Midlothian Startup Completion

The startup phase at Midlothian was completed, with electrical distribution equipment upgrades finalized, enhancing operational capacity.

Debt Reduction and Cash Flow Generation

Debt was reduced by $25 million, achieving a net leverage target of 3 times. Cash provided by operating activities increased significantly to $52 million from $4 million in 2023.

Future Growth and Efficiency Plans

Plans to increase aseptic processing capacity by 20% by the end of 2026 and achieve a $125 million adjusted EBITDA annual run rate by the end of 2025.

Lowlights

Gross Profit Margin Decline

Gross profit decreased by $3.9 million in Q4 2024, with adjusted gross margin dropping from 17.2% to 16.1% due to increased depreciation and temporary investments.

Operational Downtime at Midlothian

The electrical equipment upgrade at Midlothian caused over 10 days of downtime, resulting in inefficiencies and some waste, impacting production capacity.

Loss from Continuing Operations

The company reported a loss from continuing operations of $4.6 million in Q4 2024, compared to a loss of $3 million in the prior year period.

Company Guidance

In SunOpta's fourth quarter 2024 earnings call, the company provided guidance for fiscal year 2025, highlighting a revenue growth expectation of 7% to 11%, translating to $775 million to $805 million. Adjusted EBITDA is projected to grow by 9% to 16%, reaching $97 million to $103 million. The company aims to exit 2025 with an annual adjusted EBITDA run rate of $125 million. SunOpta plans to achieve this by leveraging operational efficiencies, targeting a gross margin of 18% to 19% by Q4 2025, while maintaining a focus on reducing leverage to 2.5 times by year-end. Capital expenditures are forecasted between $30 million to $35 million, primarily for maintenance and productivity improvements. The company also highlighted its commitment to driving shareholder value through increased return on invested capital and sustainable free cash flow generation.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.