Mama’s Creation (MAMA) Reports Q2
Mama’s Creation (MAMA), our micro-cap grocery company that’s a play on the growth in deli prepared food, reported a solid Q2 after the closing bell yesterday that slightly surpassed expectations. Revenue grew by 14% to $28.4 million versus expectations of $28.1 million while EPS of $0.03 was in line. Adjusted EBITDA of $2.7 million beat expectations of $2.2 million. “Expectations” reflect the consensus estimates of only four analysts, so not a large sample size.
Turning to the outlook, management talked about how the major cost pressures of construction and CapEx (doubling chicken capacity) and seasonal commodity pricing headwinds (especially chicken) should be in the rearview mirror and that they expect margins to increase back to historical highs in the coming quarters.
Management also talked about gaining a toehold in Walmart (WMT) with a couple of products set to appear in 2,000 stores starting in a few weeks as well as a major win with Costco (COST) which will carry the company’s sauce across the Northeast as well as Mama’s three-pound meatball sleeve in six regions (two of which are new).
Stepping back, this is one of those companies with a growth profile that likely appeals more to detail-oriented investors as there is a lot of fine-tuning, operational improvement-type stuff going on in the background that needs to be appreciated as it supports the splashier (relatively speaking) strategies of growing into more and bigger stores, M&A and new product introductions that are more likely to move the stock when they are announced.
I liked what I heard on the conference call. MAMA stock is trading down about 5% on the day, which may be more a reflection of general market conditions than anything stock-specific here. The few analysts that follow the stock have bumped up price targets, likely happy to hear that management sees higher margins and is sticking with its 2024 outlook for double-digit revenue growth.
MAMA remains a buy. Buy
Copyright © 2024. All rights reserved. Copying or electronic transmission of this information without permission is a violation of copyright law. For the protection of our subscribers, copyright violations will result in immediate termination of all subscriptions without refund. Disclosures: Cabot Wealth Network exists to serve you, our readers. We derive 100% of our revenue, or close to it, from selling subscriptions to our publications. Neither Cabot Wealth Network nor our employees are compensated in any way by the companies whose stocks we recommend or providers of associated financial services. Employees of Cabot Wealth Network may own some of the stocks recommended by our advisory services. Disclaimer: Sources of information are believed to be reliable but they are not guaranteed to be complete or error-free. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Buy/Sell Recommendations: are made in regular issues, updates, or alerts by email and on the private subscriber website. Subscribers agree to adhere to all terms and conditions which can be found on CabotWealth.com and are subject to change. Violations will result in termination of all subscriptions without refund in addition to any civil and criminal penalties available under the law.
