Why Vital Farms Stock Is Plunging Today
Key Points
Vital Farms announced that it hopes to grow its sales from $712 million over the last year to $2 billion by 2030.
However, management adjusted 2026 revenue guidance downward as the company implements a new ordering system.
Ultimately, this should prove to be a temporary headwind, and Vital Farms offers investors considerable upside.
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Shares of leading pasture-raised egg producer Vital Farms, Inc. (NASDAQ: VITL) dropped 9% Tuesday as of noon ET. The public benefit corporation (PBC) held its investor day presentation on Dec. 16 and announced a new long-term goal to reach $2 billion in sales by 2030.
This would imply a roughly 20% revenue growth rate annually through 2030 and is a marked step up from its existing goal to reach $1 billion in sales by 2027 (which management still believes it is on track for).
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So why is Vital Farms stock dropping today?
Despite these encouraging longer-term goals, management announced that revenue would only be $760 million this year -- far short of analysts' expectations of $776 million. While this guidance may seem alarming, the bulk of the slowdown stems from Vital Farms' switch to a new enterprise resource planning system, which will impact fourth-quarter results.
This should prove to be a temporary disruption, however, so I think the sell-off is somewhat short-sighted, especially with Vital Farms' stock now down nearly 40% from its 52-week high.
Is Vital Farms a buy?
Vital Farms has quickly become the leading brand in pasture-raised eggs in the United States. Working with 575 family farms across the "pasture belt" of the U.S., the company focuses on sustainable farming and the ethical treatment of its suppliers' animals. Furthermore, as a PBC, Vital Farms focuses on the long-term and strives to create win-win situations for all its stakeholders, including farmers, consumers, the environment, retail locations, crew members, and shareholders.
Currently trading at just 24 times earnings -- despite growing sales by 34% annually over the last five years and by 37% in its latest quarter -- Vital Farms is an intriguing growth stock to watch. If the company can grow its sales by 150% as its 2030 projections suggest, Vital Farms could be a steal at today's valuation -- especially as healthier food options continue to gain importance among U.S. customers.
Should you buy stock in Vital Farms right now?
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Josh Kohn-Lindquist has no position in any of the stocks mentioned. The Motley Fool recommends Vital Farms. The Motley Fool has a disclosure policy.
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