- It seems that for investors in FRPT, the third profit miss in a row precipitated by the inflationary pressure on margins is another wake-up call.
- The Q2 top line performance was robust. It is impossible to criticize a close to 36% revenue growth rate which was even higher than analysts anticipated.
- But inflation dented margins. To address that, FRPT will raise prices.
- That is highly uncertain if consumers will positively respond to that move. I hope that FRPT will deliver on its revenue targets, but I still see no rationale for paying 4.7x P/2025 Sales.
- The risk/reward profile is out of proportion, and I am staying away from the stock.
For further details see:
Freshpet: Inflation Is A Wake-Up Call