Operational Improvements And AI Adoption Will Expand Global Offerings

Key Takeaways

• Structural cost cuts, automation, and AI initiatives are expected to drive lasting margin improvement and increased operational efficiency over the coming years.
  
• Product innovation and international expansion target shifting consumer preferences, aiming to boost retention, diversify revenue, and capture growth in health-conscious, urban demographics.
  
• Declining customer growth, operational setbacks, increased competition, and international expansion challenges threaten HelloFresh's profitability, market share, and margin stability.

Catalysts

Operates as meal kit provider for home industry.

• Significant structural cost reductions and operational improvements are ongoing, leading to permanently lower fixed costs and higher margins per order. These measures are still ramping up and expected to fully benefit margins, EBIT, and free cash flow in 2026 and beyond.
  
• Major product upgrades and expanded menu offerings (notably in the U.S. and international markets) are launching in H2 2025 and scaling into 2026, targeting a radically better and more personalized food experience. This directly supports higher retention rates, increased customer lifetime value, and top-line revenue growth.
  
• Increased investment in automation, supply chain optimization, and the deployment of generative AI in content production and menu planning are underway, potentially enabling further efficiency gains and margin expansion above current targets.
  
• Product reinvestment is focused on addressing shifting consumer preferences for health, convenience, and dietary customization, with tailored offerings (e.g., larger menus, premium proteins, GLP-1 options) aimed at higher-value, health-conscious, and time-sensitive customer segments-positioning for revenue and AOV growth in line with rising demand trends among younger and urban populations.
  
• Continued expansion of ready-to-eat offerings and international footprint (e.g., new European RTE site ramping in 2026) will diversify revenue streams, capitalize on global adoption of e-commerce/direct-to-consumer food delivery, and mitigate regional growth constraints, supporting both revenue and earnings growth.

HelloFresh Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming HelloFresh's revenue will decrease by 0.6% annually over the next 3 years.
• Analysts assume that profit margins will increase from -2.4% today to 3.1% in 3 years time.
• Analysts expect earnings to reach €229.1 million (and earnings per share of €0.79) by about August 2028, up from €-171.8 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 8.0x on those 2028 earnings, up from -6.6x today. This future PE is lower than the current PE for the DE Consumer Retailing industry at 18.3x.
• Analysts expect the number of shares outstanding to decline by 5.85% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.57%, as per the Simply Wall St company report.

HelloFresh Future Earnings Per Share Growth

Risks

• HelloFresh is experiencing declining revenues and order volumes (down 9% YoY and 12% decline in orders in Q2), driven primarily by lower new customer acquisition, indicating challenges in returning to sustainable top-line growth; this places future revenue growth at risk.
  
• Operational setbacks and increased complexity in scaling its ready-to-eat (RTE) offerings-especially in the US-have led to temporary disruptions in customer satisfaction and hindered category growth, suggesting execution risks that could impact both recurring revenues and customer retention.
  
• Foreign exchange headwinds, particularly a weakening USD and other non-euro currencies versus the euro, have had significant negative impacts on reported revenues and profitability-€365m hit to revenues and €38m to EBITDA for 2025-introducing ongoing volatility to net margins and overall earnings given the geographic mix of revenue.
  
• Increasing competition in both meal kit and RTE categories (e.g., from CookUnity and Wonder/Blue Apron), combined with a fragmented food delivery market, threatens HelloFresh's market share and may require greater investment to maintain competitiveness, potentially compressing margins and limiting earnings growth.
  
• Expansion into international RTE markets is currently contributing negative EBITDA (€15m loss this year), with profitability in new geographies and categories proving difficult; this could cap future earnings and weigh on group-level net margins as scaling continues.

Valuation

• The analysts have a consensus price target of €12.161 for HelloFresh based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €18.0, and the most bearish reporting a price target of just €8.8.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €7.4 billion, earnings will come to €229.1 million, and it would be trading on a PE ratio of 8.0x, assuming you use a discount rate of 5.6%.
  
• Given the current share price of €7.32, the analyst price target of €12.16 is 39.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.