Sometimes beating expectations is nice. Sometimes it's really nice. For Mama's Creations, Inc. (MAMA), Monday's third-quarter results fell squarely in the latter category.
The company reported earnings of 1 cent per share when analysts were bracing for a 2-cent loss. That's the kind of surprise Wall Street appreciates. Revenue came in at $47.3 million, sailing past the $43.2 million consensus estimate by nearly 10%. Not bad for a quarter.
CEO Adam L. Michaels seemed pleased with the momentum, explaining that "our third quarter demonstrated meaningful momentum in scaling the business. With the integration of the business of Crown 1 underway, we delivered broad-based growth across our protein portfolio, deployed high-return trade and marketing investments, leveraging newly added retail doors and cross-selling. We also implemented targeted price increases across both our beef and chicken portfolios to help offset commodity headwinds, while improvements in chicken operations enhanced throughput and lowered overtime, helping us meet our margin objectives."
In other words, the Crown 1 integration is actually working, the company is getting products into more stores, and they've managed to raise prices without scaring off customers. Meanwhile, operational improvements in their chicken business are making production more efficient. It's the trifecta of good news: growing sales, better margins, and operational excellence.
Investors certainly liked what they heard. Mama's Creations shares jumped 16% on Tuesday, closing at $12.97.
Analyst Price Target Updates
The strong results prompted two analysts to revise their outlook on the stock, both maintaining bullish stances while boosting their price targets:
Craig-Hallum analyst Eric Des Lauriers kept his Buy rating and raised his price target from $12 to $16. Given that shares were trading right around that previous target, the upgrade makes sense.
Lake Street analyst Ryan Meyers also maintained a Buy rating while lifting his target from $15 to $18, suggesting he sees even more upside ahead as the company continues executing on its growth strategy.
With both analysts raising targets following the earnings beat and the stock still trading below the new price targets, the Street seems to be betting that Mama's Creations has more room to run.
