Vital Farms capitalizes on the growing demand for pasture-raised eggs

Vital Farms Inc. NASDAQ:VITL sources and markets pasture-raised, cage-free, sustainable and ethical eggs and dairy products at a premium price. The consumer staples company is appealing to the growing trend of consumers migrating towards premium “clean label” foods. The appeal isn’t just aimed at customers; Investor stocks have been parabolic, rising nearly 60% year to date (YTD). Vital Farms’ customer base tends to be elastic, ignoring higher prices in exchange for fresh, reliable, premium, high-quality, ethically sourced foods. The company competes with major egg producer Cal-Maine Foods Inc. NASDAQ: CALMwhich recorded excellent results despite the shortage of eggs due to the spread of avian influenza.

Viable farm spreading like wildfire

The company’s products are highly popular in premium grocery stores such as Whole Foods NASDAQ:WFM and Weis Markets NYSE:WMK at Target Co. New York Stock Exchange: TGTWalmart Inc. New York Stock Exchange: WMTGigante Group, Ltd. OTCMKTS: GGLTSafeway Inc. NYSE: SWY and the Food Lion OTCMKTS: ADRNY.

Their organic, pasture-raised eggs are known to sport vibrant orange yolks from “happy hens” that are free to roam on healthy pasture with at least 108 square feet each. Vital Farms claims to be a pioneer in pasture-raised eggs, growing from a single farm in Austin, Texas, to the “leading U.S. brand of pasture-raised eggs in the country.” Their catchy motto is “Keeping It Bullsh*t-Free.”

Products from vital farms

Their egg products are pasture-raised and include organic, restorative, True Blue Heirloom (with real blue shells), hard-boiled and whole liquid variations. They also sell 83% salted and unsalted butter from grass-fed and pasture-raised cows. Vital Farms cows have access to the outdoors 200 days a year.

Weekly cups template

The weekly candlestick chart on VITL illustrates a cup pattern. The cupped lip line formed at a high of $26.09 on May 3, 2021. The stock fell to a low of $7.89 by June 7, 2022. The stock rallied to $18.18 by January 17, 2023, but fell to $10.41 in September. 18, 2023. From then on, buyers continued to push the stock higher, pushing VITL towards the retest of the cup lip line. The weekly relative strength index (RSI) peaked near the 84 band after 10 consecutive weeks of higher highs. Pullback support levels are at $23.78, $20.18, $18.18, $14.16.

The end result is increasing

On March 7, 2024, Vital Farms reported fourth-quarter 2023 revenue growth of 23.4% to $135.81 million, beating consensus estimates of $4.79 million. It crushed consensus EPS estimates by 10 cents to 17 cents. Net income was $7.2 million compared to $1.9 million in the same period a year earlier. Adjusted EBITDA rose to $13.9 million from $6.9 million.

Full-year 2023 saw net revenue rise 30.3% to $471.9 million, up from $362.1 million. Net revenues increased 28% year over year. Net income rose to $25.6 million, up from $1.2 million. Adjusted EBITDA was $48.3 million compared to $16.2 million.

CEO Insights

Vital Farms CEO Russell Diez-Canseco noted that the fourth quarter of 2023 was the strongest quarter ever in terms of net revenue. Vital Farms is on track to reach $1 billion in net revenue by 2027. The company has made significant progress toward its goal of 35% gross margin and 12%-14% adjusted EBITDA margin. The roadmap is putting the 2027 goals well within reach. Most distribution gains come from expanding its mass channel and existing chains into regional retail in the South, California and the Northeast. The average number of stock units (SKUs) grew with existing retailers to 2.7, up from 2.4 in 2022.

Diez-Canseco said: “We continue to see faster growth in sales of higher price point SKUs, fueled in particular by strong demand for our 18-pack and organic eggs. Positive trends in the organic category They demonstrate Vital Farms’ strong reputation and foundation. They also demonstrate that consumers are increasingly willing to pay a premium to make sustainable and ethical food choices.”

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