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Westrock Coffee Company (WEST)
:WEST
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Westrock Coffee
(NASDAQ:WEST)
54Neutral
Positive Factors
Contracting Success
The company has executed contracts with purchase orders from a dozen 'premier global CPG brands' and from another 12+ retailers and distributors, accounting for ~80% of the production and packaging capacity.
Revenue and Profitability
Management expects record volume and profitability for single-serve coffee products in FY25, driven by new demand from Westrock customers and leading CPG brands.
Negative Factors
Revenue Challenges
Challenges have been recognized regarding the timing of commercialized product revenues from the Conway facility, influenced by customers' contractual obligations with old suppliers and a choppier consumer environment.
Stock Performance
Volatility within the legacy coffee & tea business (bagged roasted and ground coffee and single-serve pods) has contributed to YTD declines in the stock price.
Westrock Coffee (WEST) vs. S&P 500 (SPY)
Market Cap
$667.13M
Dividend YieldN/A
Average Volume (3M)318.34K
Price to Earnings (P/E)―
Beta (1Y)0.32
Revenue Growth-1.62%
EPS Growth-81.45%
CountryUS
Employees1,408
SectorConsumer Defensive
Sector Strength73
IndustryPackaged Foods
Share Statistics
EPS (TTM)-0.89
Shares Outstanding94,227,800
10 Day Avg. Volume298,424
30 Day Avg. Volume318,344
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.76
Price to Cash Flow (P/CF)58.00
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$10.33Price Target Upside45.90% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
Westrock Coffee Business Overview & Revenue Model
Company DescriptionWestrock Coffee Company (WEST) is a leading integrated coffee, tea, and extract service provider. The company operates within the beverage industry, focusing on supplying coffee and tea products to retail, food service, and convenience store channels. Westrock Coffee is known for its commitment to quality and sustainability, offering a variety of products that include branded and private label coffee, tea, flavors, extracts, and ingredients.
How the Company Makes MoneyWestrock Coffee generates revenue through its diverse product offerings and comprehensive service model. The company's primary revenue streams come from selling coffee and tea products both under its own brand and as private label products for other companies. They supply to a wide range of sectors including retail, food service, and convenience stores. Additionally, Westrock Coffee leverages its expertise in extracts and flavors to offer custom product solutions, catering to specific client needs. Significant partnerships and long-term contracts with major retailers and foodservice providers also play a crucial role in their earnings, ensuring stable and recurring revenue. The company's commitment to sustainability and quality enhances its brand value, further contributing to its financial success.
Westrock Coffee Financial Statement Overview
Summary
Westrock Coffee experiences significant financial challenges. Its income statement reflects ongoing profitability issues, the balance sheet suggests financial instability due to high leverage, and cash flows indicate an inability to generate sufficient internal cash. The company's reliance on debt and external financing raises potential risks.Income Statement
Westrock Coffee's revenue has been relatively flat over the past few years, with negligible growth observed. The company has consistently struggled with profitability, indicated by negative EBIT and net income margins. This suggests operational challenges and an inability to control costs effectively. However, gross profit remains positive, showing some ability to generate revenue beyond the cost of goods sold.55
Neutral
Balance Sheet
Westrock Coffee's balance sheet indicates high leverage with a substantial amount of debt compared to equity, reflected in a concerning debt-to-equity ratio. The equity ratio is low, indicating reliance on debt financing. Although total assets have increased, equity has diminished significantly, pointing to financial instability and potential risks associated with high leverage.45
Neutral
Cash Flow
The company has consistently reported negative operating and free cash flows, indicating cash flow challenges. Free cash flow has been declining, and operating cash flow is negative, which raises concerns about the company's ability to generate cash to fund operations and growth. The financing cash flow is positive, suggesting a reliance on external financing to cover cash deficits.40
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 850.73M | 864.71M | 867.87M | 698.14M | 550.85M | Gross Profit |
| 153.77M | 139.86M | 152.76M | 145.42M | 107.20M | EBIT |
| -49.12M | -20.43M | 23.93M | 16.95M | -8.99M | EBITDA |
| -7.78M | 14.92M | 4.36M | 48.80M | -97.34M | Net Income Common Stockholders |
| -80.30M | -34.58M | -55.46M | -21.31M | -128.87M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 26.15M | 37.20M | 16.84M | 19.34M | 16.89M | Total Assets |
| 1.10B | 971.51M | 744.53M | 593.02M | 548.14M | Total Debt |
| 165.06M | 344.96M | 216.91M | 337.81M | 327.71M | Net Debt |
| 138.91M | 307.12M | 200.07M | 318.46M | 310.82M | Total Liabilities |
| 730.45M | 583.56M | 457.86M | 487.15M | 447.22M | Stockholders Equity |
| 97.48M | 387.96M | 9.27M | -239.71M | -201.75M |
| Cash Flow | Free Cash Flow | |||
| -172.87M | -228.85M | -120.06M | -22.56M | -32.92M | Operating Cash Flow |
| -13.24M | -64.06M | -56.63M | 2.88M | -13.45M | Investing Cash Flow |
| -145.92M | -168.35M | -74.17M | -22.65M | -411.82M | Financing Cash Flow |
| 156.63M | 244.21M | 134.68M | 23.84M | 442.58M |
Westrock Coffee Technical Analysis
Positive
7.08
Price Trends
6.59
Positive
6.77
Positive
7.59
Negative
Market Momentum
0.17
Negative
55.96
Neutral
86.35
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WEST, the sentiment is Positive. The current price of 7.08 is above the 20-day moving average (MA) of 6.68, above the 50-day MA of 6.59, and below the 200-day MA of 7.59, indicating a neutral trend. The MACD of 0.17 indicates Negative momentum. The RSI at 55.96 is Neutral, neither overbought nor oversold. The STOCH value of 86.35 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WEST.
Westrock Coffee Risk Analysis
Westrock Coffee disclosed 33 risk factors in its most recent earnings report. Westrock Coffee 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
Westrock Coffee Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $18.50M | 6.12 | 11.70% | ― | 15.24% | ― | |
71 Outperform | $45.78B | 32.04 | 5.77% | 2.64% | 3.62% | -32.23% | |
67 Neutral | $111.01B | 31.58 | -47.07% | 2.41% | -1.48% | -17.32% | |
63 Neutral | $20.68B | 14.36 | -12.41% | 3.14% | 1.24% | 2.53% | |
61 Neutral | $48.26M | ― | -23.75% | ― | -9.51% | 83.29% | |
57 Neutral | $454.83M | ― | -22.32% | ― | -1.04% | 86.17% | |
54 Neutral | $667.13M | ― | -21.15% | ― | -1.62% | -81.45% |
* Consumer Defensive Sector Average
Performance Comparison
WEST
Westrock Coffee
7.08
-3.23
-31.33%
JVA
Coffee Holding Co
3.24
1.65
103.77%
KDP
Keurig Dr Pepper
33.74
3.33
10.95%
FARM
Farmer Brothers Company
2.26
-1.34
-37.22%
SBUX
Starbucks
97.73
8.47
9.49%
BRCC
BRC
2.12
-2.24
-51.38%
Westrock Coffee Earnings Call Summary
Earnings Call Date: Mar 11, 2025 | % Change Since: 7.44% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Neutral
The call presented a balanced view of strong financial performance and infrastructure investments with significant growth projections, alongside challenges such as delayed monetization and risks from higher coffee prices.Highlights
Strong EBITDA Growth
Segment adjusted EBITDA in the Beverage Solutions unit reached $17.8 million, up 53% over the prior year. Overall, combined segment adjusted EBITDA was $21 million, also up 53% compared to the previous year.
Significant Infrastructure Investments
Westrock Coffee invested almost $400 million in a new roast to extract ready-to-drink facility, a single serve cup manufacturing facility, and a distribution center.
Volume Growth in Extracts and RTD Business
The extracts and RTD business saw nearly 25% volume growth and significant gross profit expansion.
Successful Customer Acquisition
Westrock Coffee secured contracts with over a dozen premier global CPG brands and many retailers, filling over 80% of production capacity at the new Conway facility.
2025 and 2026 Growth Forecast
Projected EBITDA growth with $66.5 million expected in 2025 and $140 million in 2026, reflecting strong visibility into upcoming growth.
Lowlights
Single Serve Cup Volume Decline
Single serve cup volumes remained below forecast for much of the year, impacting overall performance.
Delayed Monetization of Conway Facility
Monetization of the Conway investment was delayed, with significant operating costs absorbing potential gains.
Decreased Sales in Beverage Solutions
Net sales for the Beverage Solutions segment decreased by 8.8% compared to 2023, with declines in core coffee and single-serve products by 13% and 16% respectively.
Impact of Higher Green Coffee Prices
Higher green coffee prices led to increased inventory costs and potential impact on consumer demand, introducing risk to future revenue projections.
Company Guidance
During Westrock Coffee Company's fourth quarter 2024 earnings call, guidance focused on significant growth metrics and future expectations. The company reported a 53% increase in segment adjusted EBITDA for their Beverage Solutions unit, reaching $17.8 million, and a 52% rise in their Sustainable Sourcing & Traceability segment. Overall, combined segment adjusted EBITDA was $21 million for the quarter, marking another 53% increase year-over-year. For the full year, the company achieved $60 million in segment adjusted EBITDA, reflecting a 33% growth over the previous year. The guidance highlighted expectations of a 50% annual EBITDA growth for the next two years. For 2025, Westrock anticipates a consolidated adjusted EBITDA of $66.5 million, factoring in $15 million of scale-up costs for their Conway facility, while projecting $140 million in 2026 as the facility reaches full capacity. The guidance also addressed potential impacts of higher coffee prices on demand, but reiterated confidence in operational improvements and customer onboarding strategies.Westrock Coffee Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Westrock Coffee Expands Board with New Director Appointment
Positive
Nov 7, 2024
Westrock Coffee Company has expanded its board of directors to eleven members, appointing Ken Parent as a Class I director and Vice Chairman. Parent will serve until the 2026 annual meeting, receiving a one-time restricted stock grant valued at $350,000 and an annual equity grant of $260,000. This strategic move enhances governance and aligns with Westrock’s growth plans in the competitive financial market.
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.