Smart for Life, Inc. (SMFL) in Miami, Fla., develops, manufactures, markets, and sells nutraceutical and related products internationally. The company made its stock market debut on Feb. 16, 2022, going public via a traditional initial public offering. It raised $14.40 million in gross proceeds. The company recently acquired Ceautamed Worldwide. The acquisition delivers ownership of the “Greens First" brand and further validates SMFL’s global buy and build strategy.
SMFL also launched its products under the Doctors Scientific Organica brand on Amazon Singapore, expanding its international presence into Southeast Asia. However, the stock has declined 8.1% in price over the past month to close yesterday’s trading session at $1.01. In addition, it is currently trading 68.9% below its all-time high of $3.25, which it hit on Feb.16, 2022. Furthermore, the inflationary pressures on production costs and supply chain constraints make the company’s near-term outlook bleak.
Here is what could influence SMFL’s performance in the upcoming months:
Low Profitability
In terms of trailing-12-month CAPEX/Sales, SMFL’s 0.07% is 97.8% lower than the 3.02% industry average. Its trailing-12-month gross profit margin of 26.56% is 20.4% lower than the 33.39% industry average. Furthermore, the stock’s trailing-12-month net income margin, levered FCF margin, and ROTA are negative compared to the 5.12%, 4.22%, and 4.83% respective industry averages.
Stretched Valuation
In terms of forward EV/S, SMFL’s 8.48x is 359.4% higher than the 1.84x industry average. Its 2.62x forward P/S is 89.9% higher than the 1.38x industry average.
POWR Ratings Reflect Bleak Prospects
SMFL has an overall D rating, which equates to a Sell in our POWR Rating system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. SMFL has a D grade for Quality, which is in sync with its lower-than-industry profitability ratios.
The stock has a C grade for Value, which is consistent with its higher-than-industry valuation ratios.
SMFL is ranked #75 out of 85 stocks in the Food Makers industry. Click here to access SMFL’s ratings for Stability, Momentum, Growth, and Sentiment.
Bottom Line
SMFL is currently trading below its 50-day moving average of $1.11, indicating a downtrend. Also, it could keep retreating in the near term due to concerns over high inflation and supply chain crisis. Because the stock looks overvalued at the current price level, we think it best to avoid it now.
How Does Smart for Life (SMFL) Stack Up Against its Peers?
While SMFL has an overall POWR Rating of D, one might want to consider investing in the following Food Makers stocks with an A (Strong Buy) rating: JBS S.A. (JBSAY), Grupo Bimbo, S.A.B. de C.V. (GRBMF), and Sanderson Farms, Inc. (SAFM).
SMFL shares were trading at $1.05 per share on Wednesday afternoon, up $0.04 (+3.96%). Year-to-date, SMFL has declined -60.82%, versus a -2.98% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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