HelloFresh Stock Drops on Slowing Growth, But Valuation and Long-Term Potential Remain Attractive
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HelloFresh has seen strong revenue growth historically, but growth slowed significantly in 2022. The company lowered its 2022 outlook due to fewer customer acquisitions and production capacity issues.
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The stock dropped over 40% in November 2022 after HelloFresh lowered its outlook. This seems like an overreaction given the company's strong balance sheet.
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At current valuations, HelloFresh trades at a forward P/S of 0.4x and EV/EBITDA of 5x, which looks attractive relative to its growth potential.
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There is room for HelloFresh to grow penetration in large markets like the U.S. If U.S. penetration reaches current highest levels, it could drive over €5b in incremental revenue.
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Key risks are further weakening of consumer demand and spending due to inflation. Need to monitor consumer behavior and management's commentary on demand trends.