Borealis Foods Inc. (NASDAQ: BRLS)

Sector: Consumer Defensive Industry: Packaged Foods CIK: 0001852973
Market Cap 28.35 Mn
P/B -2.19
P/E -1.55
P/S 1.02
ROIC (Qtr) -74.77
Div Yield % 0.00
Rev 1y % (Qtr) -7.60
Total Debt (Qtr) 34.62 Mn
Debt/Equity (Qtr) -2.67
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About

Borealis Foods Inc. (BRLS) is a food technology company that operates in the global food industry, specifically focusing on the instant noodle products sector. The company has made a name for itself by developing high-quality, affordable, sustainable, and nutritious ready-to-eat meals. Borealis Foods' main business activities revolve around creating products that address food security and nutrition challenges on both national and global levels. The company has a presence in various countries and regions, including the United States, Canada, Mexico,...

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Investment thesis

Bull case

  • Retained earnings of (103.36M) represent substantial 7.98x of equity (12.95M), indicating strong internal capital generation.
  • Strong tangible asset base of 54M provides 23.47x coverage of intangibles 2.30M, indicating robust asset quality.
  • Tangible assets of 54M provide robust 20.97x coverage of receivables 2.57M, showing strong asset quality.

Bear case

  • With cash reserves of 128869 against inventory of 6M, the 0.02 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • The company's operating cash flow of (4.58M) shows concerning coverage of stock compensation expenses of 315842, with a -14.50 ratio indicating potential earnings quality issues.
  • Free cash flow of (4.71M) provides weak coverage of capital expenditures of 129117, with a -36.47 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of (12.83M) show weak coverage of depreciation charges of 1.87M, with a -6.86 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of (4.71M) represents just -1.11x of debt issuance 4.25M, suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer comparison

Companies in the Packaged Foods
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 KHC Kraft Heinz Co 28.20 Bn -4.82 1.13 21.22 Bn
2 GIS General Mills Inc 26.99 Bn 20.72 1.54 13.73 Bn
3 JBS Jbs N.V. 17.81 Bn 10.08 0.23 23.92 Bn
4 MKC Mccormick & Co Inc 16.10 Bn 44.21 3.77 4.00 Bn
5 HRL Hormel Foods Corp /De/ 12.37 Bn 18.03 1.34 2.86 Bn
6 SJM J M SMUCKER Co 11.08 Bn 19.60 1.97 7.91 Bn
7 PPC Pilgrims Pride Corp 10.32 Bn 9.54 0.56 3.29 Bn
8 MICC Magnum Ice Cream Co N.V. 9.71 Bn 28.17 1.04 4.02 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.07 1.47
EV to Cash from Ops. EV/CFO -13.16 29.75
EV to Debt EV to Debt 1.74 27.85
EV to EBIT EV/EBIT -4.70 86.88
EV to EBITDA EV/EBITDA -4.07 -156.20
EV to Free Cash Flow [EV/FCF] EV/FCF -12.80 -5.67
EV to Market Cap EV to Market Cap 2.13 1.15
EV to Revenue EV/Rev 2.16 7.32
Price to Book Value [P/B] P/B -2.19 8.48
Price to Earnings [P/E] P/E -1.55 14.45
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 4.58
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 3.76
Dividend per Basic Share Div per Share (Qtr) 0.00 0.65
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 22.76
Interest Coverage Int. cover (Qtr) -2.28 6.64
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 94.77 -118.07
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -82.14 43.48
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.66
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 38.70 -48.16
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 16.94 -152.35
EBIT Growth (1y) % EBIT 1y % (Qtr) 39.03 -50.79
EBT Growth (1y) % EBT 1y % (Qtr) 30.44 -54.94
EPS Growth (1y) % EPS 1y % (Qtr) 47.24 -28.10
FCF Growth (1y) % FCF 1y % (Qtr) 74.80 7.02
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 8.49 439.70
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.50 1.01
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.12
Cash Ratio Cash Ratio (Qtr) 0.00 0.86
Current Ratio Curr Ratio (Qtr) 0.15 2.60
Debt to Equity Ratio Debt/Equity (Qtr) -2.67 2.21
Interest Cover Ratio Int Coverage (Qtr) -2.28 6.64
Times Interest Earned Times Interest Earned (Qtr) -2.28 6.64
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -39.30 -919.13
EBIT Margin % EBIT Margin % (Qtr) -46.00 -1,474.87
EBT Margin % EBT Margin % (Qtr) -66.21 -1,537.76
Gross Margin % Gross Margin % (Qtr) 9.70 26.98
Net Profit Margin % Net Margin % (Qtr) -65.70 -1,538.60