The last six months have been rough for Natural Grocers by Vitamin Cottage (NGVC) (“Natural Grocers”), as a quick reversal in same-store comps, inflation, supply chain challenges, and challenges in opening new stores drove a big drop in the share price after fiscal second quarter earnings, a drop that the shares have yet to recover from despite some solid two-year comp stacks and evidence of stabilization/normalization in the business.
Down more than 25% since my last update, this call has clearly not worked, with Natural Grocers shares lagging comps like Sprouts (SFM) and United Natural Foods (UNFI) (a distributor, not a store operator). I’ve revised my numbers lower, but high single-digit long-term revenue growth (driven by both new store openings and same-store sales) and low single-digit FCF margins can support a higher price than what the market is showing today.
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