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SOVO

Sovos Brands NasdaqGS:SOVO Stock Report

Last Price

US$14.51

Market Cap

US$1.5b

7D

6.5%

1Y

9.6%

Updated

04 Oct, 2022

Data

Company Financials +
SOVO fundamental analysis
Snowflake Score
Valuation3/6
Future Growth3/6
Past Performance0/6
Financial Health3/6
Dividends0/6

SOVO Stock Overview

Sovos Brands, Inc., through its subsidiaries, manufactures and distributes consumer food products in the United States.

Sovos Brands Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Sovos Brands
Historical stock prices
Current Share PriceUS$14.51
52 Week HighUS$17.41
52 Week LowUS$9.52
Beta0
1 Month Change-2.81%
3 Month Change-5.78%
1 Year Change9.59%
3 Year Changen/a
5 Year Changen/a
Change since IPO7.32%

Recent News & Updates

Oct 04

Sovos Brands: Strong Growth Continues

Summary Sovos Brands continues to generate strong revenue growth, but some of its bottom line results have been mixed. All things considered, the company has held up well in the current volatile market. Shares are not value prospects, but they can offer a nice upside for growth-oriented investors moving forward. The past several months have been particularly hard for investors in the stock market. The market, broadly speaking, has tanked amidst fears related to inflation, rising interest rates, supply chain concerns, and the prospect of a real economic downturn. Very few companies have performed well in this environment. But one company that has held up better than most is Sovos Brands (SOVO). This enterprise owns a portfolio of food brands such as Rao's, Birch Benders, and Michael Angelo's. Even though some of its financial performance has been somewhat mixed, the overall trajectory for the company looks positive. And with how far shares have fallen, upside potential from here likely is positive. Due to these factors, I have decided to keep my 'buy' rating on the company, with the understanding that market conditions should cause investors to be diligent in assessing changes to the underlying business as more data comes out. Growth continues Back in December of 2021, I wrote my first article discussing whether or not Sovos Brands made sense for investors to consider buying into. In that article, I acknowledged that the company had done well to expand at a rapid pace over the prior few years. Its overall financial picture had been getting better year after year, though it was also true that there was still plenty of room left for improvements to be made. The only thing that turned me off about the company was that its stock looked rather pricey. But given how rapidly the company was growing, I felt the firm could grow into its valuation. This led me to rate the company a 'buy', reflecting my belief that it would generate returns that would outperform the broader market for the foreseeable future. So far, that company has delivered. While the business has generated a loss for investors of 14.5%, that loss is considerably smaller than the 24% hit that investors would have received owning the S&P 500. Author - SEC EDGAR Data Despite the pricey shares, the company was aided by strength on both its top and bottom lines. For instance, during the 2020 fiscal year, revenue came in at $560.1 million. In 2021, sales shot up to $719.2 million. This 28.4% increase was driven largely by a 34% rise associated with sales of the Rao's brand. Although companies have been raising prices and such price increases could cause sales to rise in a way that looks rather deceptive, management asserted that the majority of the increase under this brand was because of higher sauce and frozen shipments to key customers. The company ended its 2021 fiscal year with household penetration for its sauce business of 10.9%. That was up 2.6% compared to the 2020 fiscal year. And exiting the final quarter of 2021, Rao's had become the number two pasta and pizza sauce brand as measured by dollar consumption in the markets in which the company operates. The firm also benefited from increased revenue associated with its spoonable yogurt and it also saw a $47.3 million increase in sales associated with the purchase of the Birch Benders brand that was acquired in October of 2020. Bottom line results for the company have been slightly mixed. For instance, net income fell from $10.8 million to $1.9 million. But if we make certain adjustments, then profits would have risen from $44.1 million to $54.3 million. Operating cash flow for the company also fell, dropping from $62.9 million to $46.9 million. But if we adjust for changes in working capital, it would have risen from $54 million to $77.3 million. Over that same window of time, we also saw EBITDA for the company expand, climbing from $91.1 million to $115.1 million. Author - SEC EDGAR Data As was the case with the 2021 fiscal year, the 2022 fiscal year seems to be somewhat mixed but generally favorable. Revenue in the first half of the 2022 fiscal year totaled $407.4 million. That's 16% higher than the $351.2 million generated the same time one year earlier. This increase in revenue was driven primarily by higher volumes and, to a lesser extent, by product pricing and improved product mix. Once again, the Rao's brand was a key driver of growth, with revenue surging by 29.6% year-over-year thanks to higher sauce sales. Other brands also improved for the most part. From a profitability perspective, the picture is more complicated. Net income fell from $10.4 million in the first half of the 2021 fiscal year to negative $26.2 million the same time this year. This was driven in part by the company's gross profit margin declining from 31.7% to 26.7% as a result of higher raw material, packaging, labor, logistics, and energy costs. The company was also somewhat affected by higher slotting fees aimed at supporting its launch of noosa frozen Gelato. Although this change in gross profit margin may not seem material, such a change spread across the revenue the company generated in the first half of the 2022 fiscal year would have impacted bottom line results by $20.4 million. Other profitability metrics have been rather volatile as well. For instance, operating cash flow rose from $12.6 million to $16.3 million. But if we adjust for changes in working capital, it would have risen more modestly from $46.4 million to $48.1 million. Meanwhile, EBITDA for the company worsened, dropping from $62.9 million to $53.3 million. When it comes to the 2022 fiscal year as a whole, management now anticipates revenue coming in near the low end of its guidance. That range was between $825 million and $835 million. Also near the low end of the guidance should be EBITDA, with that range being between $116 million and $122 million. For the purpose of my analysis, I decided just to use the very bottom of that range. No guidance was given when it came to other profitability metrics. However, if we assume that adjusted operating cash flow will increase this year at the same rate that EBITDA should, then we should anticipate a reading of $77.9 million. It's also worth noting that valuing the company is complicated by the fact that management just issued 9.775 million additional shares in exchange for gross proceeds of $136.85 million. In my analysis, I factored in these changes.

Shareholder Returns

SOVOUS FoodUS Market
7D6.5%2.1%4.4%
1Y9.6%1.6%-18.2%

Return vs Industry: SOVO exceeded the US Food industry which returned 0.3% over the past year.

Return vs Market: SOVO exceeded the US Market which returned -20% over the past year.

Price Volatility

Is SOVO's price volatile compared to industry and market?
SOVO volatility
SOVO Average Weekly Movement5.3%
Food Industry Average Movement5.5%
Market Average Movement6.9%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.8%

Stable Share Price: SOVO is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: SOVO's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
1983608Todd Lachmanhttps://www.sovosbrands.com

Sovos Brands, Inc., through its subsidiaries, manufactures and distributes consumer food products in the United States. The company operates in two segments, Dinners & Sauces, and Breakfast & Snacks. It provides pasta sauces, dry pasta, soups, frozen entrees, yogurts, pancake and waffle mixes, other baking mixes, and frozen waffles under the Rao’s, Michael Angelo’s, noosa, and Birch Benders brands.

Sovos Brands Fundamentals Summary

How do Sovos Brands's earnings and revenue compare to its market cap?
SOVO fundamental statistics
Market CapUS$1.46b
Earnings (TTM)-US$34.68m
Revenue (TTM)US$775.34m

1.9x

P/S Ratio

-42.2x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
SOVO income statement (TTM)
RevenueUS$775.34m
Cost of RevenueUS$555.97m
Gross ProfitUS$219.37m
Other ExpensesUS$254.05m
Earnings-US$34.68m

Last Reported Earnings

Jun 25, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-0.34
Gross Margin28.29%
Net Profit Margin-4.47%
Debt/Equity Ratio96.6%

How did SOVO perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is SOVO undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

  • Price-To-Sales vs Peers

  • Price-To-Sales vs Industry

  • Price-To-Sales vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for SOVO?

Other financial metrics that can be useful for relative valuation.

SOVO key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue2.4x
Enterprise Value/EBITDA22.8x
PEG Ration/a

Price to Sales Ratio vs Peers

How does SOVO's PS Ratio compare to its peers?

SOVO PS Ratio vs Peers
The above table shows the PS ratio for SOVO vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPSEstimated GrowthMarket Cap
Peer Average1.3x
HAIN Hain Celestial Group
0.8x4.8%US$1.6b
OTLY Oatly Group
2.4x21.1%US$1.7b
1.6x27.5%US$1.6b
BGS B&G Foods
0.6x2.1%US$1.2b
SOVO Sovos Brands
1.9x7.2%US$1.5b

Price-To-Sales vs Peers: SOVO is expensive based on its Price-To-Sales Ratio (1.9x) compared to the peer average (1.3x).


Price to Earnings Ratio vs Industry

How does SOVO's PE Ratio compare vs other companies in the US Food Industry?

Price-To-Sales vs Industry: SOVO is expensive based on its Price-To-Sales Ratio (1.9x) compared to the US Food industry average (1.1x)


Price to Sales Ratio vs Fair Ratio

What is SOVO's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

SOVO PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio1.9x
Fair PS Ratio1.5x

Price-To-Sales vs Fair Ratio: SOVO is expensive based on its Price-To-Sales Ratio (1.9x) compared to the estimated Fair Price-To-Sales Ratio (1.5x).


Share Price vs Fair Value

What is the Fair Price of SOVO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: SOVO ($14.51) is trading below our estimate of fair value ($27.07)

Significantly Below Fair Value: SOVO is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.


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Future Growth

How is Sovos Brands forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


168.8%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SOVO is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.9%).

Earnings vs Market: SOVO is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: SOVO is expected to become profitable in the next 3 years.

Revenue vs Market: SOVO's revenue (7.2% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: SOVO's revenue (7.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SOVO's Return on Equity is forecast to be low in 3 years time (12.4%).


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Past Performance

How has Sovos Brands performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-384.4%

Last years earnings growth

Earnings and Revenue History

Quality Earnings: SOVO is currently unprofitable.

Growing Profit Margin: SOVO is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: Insufficient data to determine if SOVO's year-on-year earnings growth rate was positive over the past 5 years.

Accelerating Growth: Unable to compare SOVO's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: SOVO is unprofitable, making it difficult to compare its past year earnings growth to the Food industry (0.3%).


Return on Equity

High ROE: SOVO has a negative Return on Equity (-7.05%), as it is currently unprofitable.


Discover strong past performing companies

Financial Health

How is Sovos Brands's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Stable Cash Runway

  • Forecast Cash Runway

Financial Position Analysis

Short Term Liabilities: SOVO's short term assets ($227.4M) exceed its short term liabilities ($101.0M).

Long Term Liabilities: SOVO's short term assets ($227.4M) do not cover its long term liabilities ($564.3M).


Debt to Equity History and Analysis

Debt Level: SOVO's net debt to equity ratio (81.8%) is considered high.

Reducing Debt: Insufficient data to determine if SOVO's debt to equity ratio has reduced over the past 5 years.


Balance Sheet


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: Whilst unprofitable SOVO has sufficient cash runway for more than 3 years if it maintains its current positive free cash flow level.

Forecast Cash Runway: SOVO is unprofitable but has sufficient cash runway for more than 3 years, due to free cash flow being positive and growing by 20.3% per year.


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Dividend

What is Sovos Brands's current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Sovos Brands Dividend Yield vs Market
How does Sovos Brands dividend yield compare to the market?
SegmentDividend Yield
Company (Sovos Brands)n/a
Market Bottom 25% (US)1.6%
Market Top 25% (US)4.5%
Industry Average (Food)2.7%
Analyst forecast in 3 Years (Sovos Brands)0%

Notable Dividend: Unable to evaluate SOVO's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate SOVO's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if SOVO's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if SOVO's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as SOVO has not reported any payouts.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

2.0yrs

Average management tenure


CEO

Todd Lachman (59 yo)

5.75yrs

Tenure

US$13,583,321

Compensation

Mr. Todd R. Lachman is Founder of Sovos Brands, Inc. and serves as its President, Chief Executive Officer and Director since January 2017. He served as a Senior Advisor of Advent International Corporation...


CEO Compensation Analysis

Todd Lachman's Compensation vs Sovos Brands Earnings
How has Todd Lachman's remuneration changed compared to Sovos Brands's earnings?
DateTotal Comp.SalaryCompany Earnings
Jun 25 2022n/an/a

-US$35m

Mar 26 2022n/an/a

-US$6m

Dec 25 2021US$14mUS$725k

US$2m

Sep 25 2021n/an/a

US$5m

Jun 26 2021n/an/a

US$12m

Mar 27 2021n/an/a

US$18m

Dec 26 2020US$3mUS$700k

US$11m

Compensation vs Market: Todd's total compensation ($USD13.58M) is above average for companies of similar size in the US market ($USD5.50M).

Compensation vs Earnings: Insufficient data to compare Todd's compensation with company performance.


Leadership Team

Experienced Management: SOVO's management team is considered experienced (2 years average tenure).


Board Members

Experienced Board: SOVO's board of directors are considered experienced (3.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: SOVO insiders have only sold shares in the past 3 months.


Recent Insider Transactions

NasdaqGS:SOVO Recent Insider Transactions by Companies or Individuals
DateValueNameEntityRoleSharesMax Price
24 Aug 22SellUS$631,055Lisa O’DriscollIndividual43,000US$14.68
22 Aug 22SellUS$17,046,750Advent International CorporationCompany1,275,000US$13.37
15 Aug 22SellUS$113,645,000Advent International CorporationCompany8,500,000US$13.37

Ownership Breakdown

What is the ownership structure of SOVO?
Owner TypeNumber of SharesOwnership Percentage
General Public6,112,8456.1%
Individual Insiders8,975,1408.9%
Institutions29,558,90929.3%
VC/PE Firms56,265,12955.8%

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 3.6%.


Top Shareholders

Top 25 shareholders own 90.28% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
55.76%
Advent International Corporation
56,265,129$816.4m-11.45%5.78%
5.42%
Wellington Management Group LLP
5,467,375$79.3m-4.68%0.01%
4.8%
Capital Research and Management Company
4,839,900$70.2m5.1%no data
4.08%
Robert Graves
4,117,462$59.7m0%no data
2.26%
BlackRock, Inc.
2,282,980$33.1m19.36%no data
2.26%
The Vanguard Group, Inc.
2,281,306$33.1m3.68%no data
2.23%
Todd Lachman
2,247,578$32.6m-5.83%no data
2.22%
American Century Investment Management Inc
2,244,776$32.6m1.33%0.02%
1.32%
William Johnson
1,334,088$19.4m-5.88%no data
1.32%
Driehaus Capital Management LLC
1,332,851$19.3m-0.65%0.21%
1.15%
FMR LLC
1,163,469$16.9m-7.65%no data
1.04%
Schroder Investment Management North America Inc.
1,044,480$15.2m0.7%0.06%
0.86%
ClearBridge Investments, LLC
871,967$12.7m6.62%0.01%
0.81%
Ranger Investment Management, L.P.
819,726$11.9m0%0.89%
0.69%
Lisanti Capital Growth, LLC
697,635$10.1m75.5%1.34%
0.62%
Millennium Management LLC
625,883$9.1m-39.06%0.01%
0.53%
Geode Capital Management, LLC
539,153$7.8m2.03%no data
0.53%
Goldman Sachs Asset Management, L.P.
536,188$7.8m-20.29%no data
0.46%
State Street Global Advisors, Inc.
462,855$6.7m12.15%no data
0.41%
Russell Investment Management, LLC
411,136$6.0m648.64%0.01%
0.41%
Macquarie Investment Management Business Trust
409,043$5.9m-5.14%0.01%
0.33%
Thornburg Investment Management, Inc.
328,472$4.8m0%0.03%
0.29%
Weiss Multi-Strategy Advisers LLC
296,796$4.3m-44.08%0.14%
0.26%
Northern Trust Global Investments
260,862$3.8m20.87%no data
0.23%
Allspring Global Investments, LLC
227,190$3.3m-13.7%0.01%

Company Information

Sovos Brands, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Sovos Brands, Inc.
  • Ticker: SOVO
  • Exchange: NasdaqGS
  • Founded: 1983
  • Industry: Packaged Foods and Meats
  • Sector: Food, Beverage & Tobacco
  • Implied Market Cap: US$1.464b
  • Shares outstanding: 100.91m
  • Website: https://www.sovosbrands.com

Number of Employees


Location

  • Sovos Brands, Inc.
  • 168 Centennial Parkway
  • Suite 200
  • Louisville
  • Colorado
  • 80027
  • United States


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SOVONasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDSep 2021

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/10/04 00:00
End of Day Share Price2022/10/04 00:00
Earnings2022/06/25
Annual Earnings2021/12/25


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.