Vital Farms (VITL) Stock Trades Up, Here Is Why

Adam Hejl /
2024/05/09 1:51 pm EDT

What Happened:

Shares of egg and butter company Vital Farms (NASDAQ:VITL) jumped 27.2% in the morning session after the company reported a "beat and raise" quarter. Vital Farms blew past analysts' revenue and EPS expectations. It raised its full-year guidance, showing that things are going better for the company than just three months ago when it previously gave financial guidance. Zooming out, we think this was a fantastic quarter that should have shareholders cheering.

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What is the market telling us:

Vital Farms's shares are not very volatile than the market average and over the last year have had only 13 moves greater than 5%. Moves this big are very rare for Vital Farms and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 2 months ago, when the stock gained 13.2% on the news that the company reported fourth quarter results that blew past analysts' operating margin and EPS expectations. Its revenue also beat, driven by volume growth of 11.6% - this type of unit growth is rare in the consumer staples industry. Topping off the strong quarter was encouraging guidance, as management's revenue and EBITDA outlook of $552 million and $57 million cleared Wall Street's projections. The company's long-term goal is to hit $1 billion in net revenue by 2027 with a 35% gross margin and 12-14% adjusted EBITDA margin. Zooming out, this was a great quarter that shareholders will appreciate.

Vital Farms is up 139% since the beginning of the year. Investors who bought $1,000 worth of Vital Farms's shares at the IPO in July 2020 would now be looking at an investment worth $1,045.

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