Functional Brands Inc. (NASDAQ: MEHA)

Sector: Consumer Defensive Industry: Packaged Foods CIK: 0001837254
Market Cap 1.51 Mn
P/B 2.50
P/E -4.00
P/S 0.22
ROIC (Qtr) -11.95
Div Yield % 0.00
Rev 1y % (Qtr) 21.37
Total Debt (Qtr) 2.94 Mn
Debt/Equity (Qtr) 4.87
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About

Investment thesis

Bull case

  • Strong operating cash flow of 1.54M provides robust 0.52x coverage of total debt 2.94M, indicating excellent debt servicing capability and financial flexibility.
  • Robust free cash flow of 1.53M exceeds capital expenditure of 8512 by 179.66x, indicating strong organic growth funding capability.
  • Operating cash flow of 1.54M provides strong 180.66x coverage of capital expenditure 8512, enabling organic growth.
  • Free cash flow of 1.53M provides healthy 0.90x coverage of inventory 1.69M, showing efficient inventory management.
  • Operating cash flow of 1.54M exceeds receivables of 89213 by 17.24x, demonstrating excellent collection efficiency.

Bear case

  • Operating cash flow of 1.54M barely covers its investment activities of (8512), with a coverage ratio of -180.66, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • The company's operating cash flow of 1.54M shows concerning coverage of stock compensation expenses of 1.01M, with a 1.52 ratio indicating potential earnings quality issues.
  • Operating earnings of 88666 show weak coverage of depreciation charges of 395449, with a 0.22 ratio indicating high capital intensity and potential reinvestment needs.
  • Tangible assets of 6.01M provide limited backing for working capital of (1.49M), which is -4.03x, suggesting increased operational risk in market downturns.
  • R&D investment of 0 represents just 0x of SG&A expenses of 4.21M, indicating potential underinvestment in innovation relative to administrative overhead.

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 0.00 1.47
EV to Cash from Ops. EV to Cash from Ops. 0.00 29.75
EV to Debt EV to Debt 0.00 27.85
EV to EBIT EV to EBIT 0.00 86.88
EV to EBITDA EV to EBITDA 0.00 -156.20
EV to Free Cash Flow [EV/FCF] EV to Free Cash Flow [EV/FCF] 0.00 -5.67
EV to Market Cap EV to Market Cap 0.00 1.15
EV to Revenue EV to Revenue 0.00 7.32
Price to Book Value [P/B] P/B 2.50 8.48
Price to Earnings [P/E] P/E -4.00 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) 0.19 6.64
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -126.26 -118.07
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 307.17 43.48
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.66
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 111.29 -48.16
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 97.39 -152.35
EBIT Growth (1y) % EBIT 1y % (Qtr) 111.29 -50.79
EBT Growth (1y) % EBT 1y % (Qtr) 57.38 -54.94
EPS Growth (1y) % EPS 1y % (Qtr) 61.54 -28.10
FCF Growth (1y) % FCF 1y % (Qtr) 427.29 7.02
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 12.59 439.70
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.83 1.01
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.12
Cash Ratio Cash Ratio (Qtr) 0.18 0.86
Current Ratio Curr Ratio (Qtr) 0.74 2.60
Debt to Equity Ratio Debt/Equity (Qtr) 4.87 2.21
Interest Cover Ratio Int Coverage (Qtr) 0.19 6.64
Times Interest Earned Times Interest Earned (Qtr) 0.19 6.64
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 7.10 -919.13
EBIT Margin % EBIT Margin % (Qtr) 1.30 -1,474.87
EBT Margin % EBT Margin % (Qtr) -5.55 -1,537.76
Gross Margin % Gross Margin % (Qtr) 56.00 26.98
Net Profit Margin % Net Margin % (Qtr) -5.60 -1,538.60