Mama’s Creations Inc

Mama's Creations, Inc. (NASDAQ: MAMA) is a marketer and manufacturer of fresh deli prepared foods, found in over 8,000 grocery, mass, club and convenience stores nationally. The Company's product portfolio consists of a variety of easy to prepare foods to address the needs of both its consumers and retailers. Its product line includes all-natural specialty prepared refrigerated foods for sale in retailers around the country. Its primary products include beef and turkey meatballs, meat loaf, chicken, sausage-related products and pasta entrees.

Recent Business and Financial Updates

• Strategic and Operational Advancements: In the third quarter of fiscal 2025, the company achieved significant progress in its strategic initiatives, highlighted by the completion of critical capital expenditure (CapEx) projects in September 2024. These investments have resulted in a notable improvement in the company’s gross margin profile. Preliminary unaudited results for November 2024 indicate a full reversal of the approximately 400 basis points of construction-related headwinds that previously weighed on margins, with further opportunities for enhancement in the near term. Additionally, the company successfully enhanced its senior leadership team with the appointment of Chris Darling as Chief Commercial Officer, a veteran with over two decades of experience in building national brands, and Moore (Skip) Tappan as Chief Operating Officer, a supply chain expert with a proven track record in optimizing operations at leading firms.
• Market Engagement and Industry Participation: The company expanded its market presence by actively participating in key industry events during the quarter, including the 2024 UNFI Holiday & Winter Show and the National Association of Convenience Stores (NACS) Show. These engagements provided an opportunity to showcase the company’s product innovations and strengthen relationships with key partners. Furthermore, the company gained national recognition by presenting at prominent investor conferences such as the Raymond James Small Cap Summit, the 15th Annual Craig-Hallum Alpha Select Conference, and the 13th Annual ROTH Deer Valley Event. These platforms allowed management to share the company’s growth strategy, operational advancements, and financial performance with investors and industry stakeholders.
• Financial Performance and Revenue Growth: For the third quarter of fiscal 2025, the company delivered robust revenue growth of 10.0%, reaching USD 31.5 million compared to USD 28.7 million in the same period last year. This increase was primarily driven by successful pricing actions, volume gains, and new customer door expansion, as well as trade promotions and cross-selling initiatives. However, gross profit for the quarter totaled USD 7.1 million, or 22.6% of total revenue, compared to USD 8.6 million, or 30.1%, in the prior year. The decline in gross margins was largely attributable to construction-related disruptions at the Farmingdale facility and elevated commodity costs, particularly chicken prices. Management estimates that these construction challenges alone impacted margins by approximately 400 basis points, though November’s results indicate significant recovery.
• Cost Management and Operational Efficiency: Operating expenses for the quarter increased modestly to USD 6.6 million, compared to USD 5.9 million in the same year-ago period, while remaining relatively stable as a percentage of revenue at 20.8%. Improvements in freight efficiency contributed to cost containment; however, marketing investments increased by 75% year-over-year as part of a strategic effort to drive long-term growth. The company also focused on enhancing operational efficiency through automation, improved procurement processes, and labor cost reductions, including the implementation of a lower-overtime staffing model to be fully realized by December. These initiatives are expected to materially strengthen the company’s margin profile going forward.
• Profitability and Cash Flow Management: Net income for the third quarter of fiscal 2025 totaled USD 0.4 million, or USD 0.01 per diluted share, compared to USD 2.0 million, or USD 0.05 per diluted share, in the prior year. Adjusted EBITDA, a non-GAAP measure, was USD 1.7 million, down from USD 3.5 million in the same period last year. Despite these near-term pressures, the company demonstrated improved cash flow from operations, which increased by 23.7% year-over-year. Cash and cash equivalents as of October 31, 2024, stood at USD 9.3 million, compared to USD 11.0 million at the beginning of the fiscal year. This decrease was primarily driven by USD 5.0 million in capital investments and USD 2.5 million in debt repayments, partially offset by working capital improvements.
• Outlook and Future Growth Opportunities: Looking ahead, the company is well positioned for continued profitable growth, supported by its completed CapEx investments, improved operational efficiencies, and leadership enhancements. Management anticipates a return to historical gross margin levels, driven by the reversal of construction-related disruptions and expected stabilization of commodity prices. With a strengthened leadership team, streamlined operations, and growing demand for its products, the company is confident in its ability to capitalize on future growth opportunities. The combination of operational excellence, strategic investments, and a disciplined focus on execution will serve as the foundation for sustained success in the coming quarters.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 63.95, recovering from overbought zone, with expectations of a consolidation or a correction till next important support zone of USD 7.00- USD 7.50. Additionally, the stock's current positioning is above the 50-period SMA and 200-period SMA, which may serve as dynamic short to medium-term support levels.  

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘WATCH’ rating has been given for Mama's Creations, Inc. (NASDAQ: MAMA) at the closing market price of USD 9.70 as of December 16, 2024. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is December 16, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.