Is Tattooed Chef a buy?

It’s time to breakdown a lesser-known name within the markets. Here is the breakdown on $TTCF, otherwise known as Tattooed Chef.


Current Price: $22.16

52/Wk High: $28.64

52/Wk Low: $9.76


Market Cap: $1.4 Billion


Read below for the breakdown!


Tattooed Chef is an up and coming plant-based frozen foods company that is growing in popularity very quickly.


Earlier this year Tattooed Chef went public when Ittella International merged with Forum Merger II. Shareholders voted in October and the rest is history.


Already Tattooed Chef is innovating, recently announcing new products to their lineup that serve as plant-based meats.


Shifting into the numbers Tattooed Chef has potential and the recent earnings reports definitely show it. Tattooed Chef reported a Q3 EPS of $0.08 along with revenues of $41 million for the quarter, representing a 65% increase.


Furthermore, the company reported that Tattooed Chef branded product revenues came in at a record $22.6 million, representing a 288% increase.


As for net loss, tattooed Chef reported a net loss of $3.3 million, much larger than the Q3 2019 net loss of $1.8 million. Although, management did note that this was due to $4.6 million in non-recurring transaction costs.


Shifting into EBITDA, Tattooed Cheff reported an Adjusted EBITDA of $1.5 million, representing 3.6% of net revenues. This is also down when compared to Q3 2019 due to those non-recurring costs.


On the downside, gross profit declined to $3.8 million, and gross margin fell lower to 9.2%. Both declines related to a $1.4 million program that led to brand exposure in 450 stores throughout eight weeks during FY 2020.


As a final note for the third quarter operating expenses more than doubled to $7.2 million mostly due once again to the large $4.6 million in expenses due to the merger with FMCI.


Taking a look at the first nine months of 2020, Tattooed Chef reported $108.9 million in revenues, representing 87% growth. Net income also improved by $0.9 million to $3.9 million throughout the first nine months of 2020.


Rounding out the first nine months of 2020 adjusted EBITDA improved to $10.6 million. Now representing 9.7% of net revenues throughout the first nine months of the year.


As for the future management was upbeat.


We expect to continue to drive top-line growth based on the ongoing success with our key club customers, expansion in new and existing retail customers, and our direct-to-consumer e-commerce site,” CEO Sam Galletti said.


The balance sheet is solid but could see improvement.


Total Debt: $1.8 million


Total Liabilities: $58.824 million


Total Assets: $66.718 million


Cash: $3.182 million


Shifting into valuation $TTCF currently trades at a price to book ratio of 2.99x. Taking a long-term view the valuation is not terrible, given the future expected growth of Tattooed Chef.


When it comes to management, Tattooed Chef’s leadership has done well but could see improvement in the coming years.


Return on Equity: -4.90%


Return on Assets: -3.98%


Return on Invested Capital: -4.08%


Given the numbers, the analysts are mixed with a mean price target of $22.00/share, representing a -0.72% downside.


Furthermore, the high price target is $26.00/share, representing a 17.33% upside, while the low price target is $18.00/share, representing a -18.77% loss.


The big money is much less involved, with just 7.45% of $TTCF being owned by institutions. Top holders include UMB Captial, Falcon Edge Capital, and Citadel Advisors.


On a technical basis, Tattooed Chef could be flashing an opportunity after its recent pullback. According to the six-month charts, the MACD has recently resumed upward momentum within a range of 0.69 down to -0.0114.


The six-month charts are also indicating an RSI of 69.10 and CCI of 194.26, both of which are on the high end. It is also important to note that $TTCF trades roughly 30% off its highs.


In short Tattooed Chef ($TTCF) has a large amount of potential given a vast array of new product launches in a few years, solid revenue growth, and an expanding market.


EAT - SLEEP - PROFIT


Disclaimer: This is not direct financial advice, simply an opinion based on independent research.