2024-07-08 22:15:52 ET
Summary
- HelloFresh operates in the meal kit delivery industry, which struggles with low customer retention rates of 10-20% compared to the 70%+ rates in the restaurant and food delivery industries.
- HelloFresh has increased its marketing expenditures significantly, from 12.5% of revenue in 2020 to 19% in 2023, leading to inconsistent profitability despite having a gross margin of over 60%.
- However, I believe HelloFresh is currently valued very cheaply, with a P/S ratio of 0.14 and a market capitalization of $1.1 billion. Management has also managed to grow market share.
- While the industry poses significant challenges, HelloFresh's excellent management and cheap valuation lead me to a HOLD recommendation.
Thesis: Due to Industry Constraints, HelloFresh Must Choose Between Growing Revenue or Profit
HelloFresh SE ( OTCPK:HELFY , OTCPK:HLFFF ), is an undisputed leader in the meal kit delivery industry. The company grew their US market share to 75%+ in 2022, and enjoys healthy gross margins of 60%+ according to Seeking Alpha data, TTM....
Read the full article on Seeking Alpha
For further details see:
HelloFresh Has A Scalability Problem