The ready-to-eat food industry has enjoyed a renaissance of sorts in recent times. Among the many companies operating in this space, Home Bistro Inc. (OTC:HBIS) occupies an enviable spot as one of the more notable contenders, known for delivering ready-to-eat gourmet, chef-prepared meals.
It’s also worth noting interest and activity of big-ticket companies in the ready-to-eat meal space. Last week, HelloFresh made a ripple in the market after the meal kits giant acquired Factor75 Inc. The multi-million-dollar deal signifies HelloFresh’s strategy to branch out and reach consumers looking for healthy, fully prepared meals. In the news release announcing the acquisition, HelloFresh CEO Uwe Voss forecast that the direct-to-consumer, ready-to-eat meals category could reach considerable valuation.
In this context, it could be a good idea for investors to take a closer look at Home Bistro and its potential in a market that continues to heat up.
Financial Performance
One of the most efficient ways to determine a company’s current state is to explore its latest financial performance. Home Bistro recently reported year-over-year revenue growth of 54% and 59%, respectively, for the three and nine-month periods ended Sept. 30, 2020.
In the earnings release, Home Bistro CEO Zalmi Duchman attributed this performance to the company’s decision to bring its food preparation and fulfilment operations in-house. The company also went public and completed a corporate name change, increasing the potential for capital, and solidifying brand consistency and visibility. Duchman noted that by gaining control of production and fulfilment, Home Bistro’s profit margins are also expected to improve. He added that the company is now on track to launch its latest line of ready-to-eat meals created by renowned “Iron Chef,” Cat Cora.
In the first nine months of 2020, Home Bistro incurred charges of non-cash and non-recurring nature to the tune of $812,000, most of which was allocated to salaries, performance-based fees in equity, and costs for developing its products. However, the company closely managed its operating costs and kept advertising to a minimum, both of which contributed to revenue growth.
Cat Cora announces Home Bistro Partnership on Steve Harvey Show
Peer Acquisition
While the recent financial performance must have triggered optimism among market watchers and investors, it is also important to look at the bigger picture. HelloFresh, a behemoth in the meal kits industry, has entered the ready-to-eat meals space as a way to accelerate its growth in the United States.
A quick advance on this strategy was the company’s recent $277 million acquisition of Factor75. Factor75 operates in the same industry as Home Bistro, where it supplies fully prepared, “restaurant quality” healthy meals. The fact that one of the biggest companies in the meal kits space has acquired a smaller player in a complementary vertical indicates industry growth in coming years.
It also signifies that Home Bistro has incredible potential if other industry giants recognize this growth. If Home Bistro can continue its current growth-rate for several years, it could become the subject of a generous acquisition offer like Factor75. Hence, it could be worthwhile for investors to keep the Home Bistro stock in their watch lists and track the company’s performance.
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