Hydrofarm Holdings (Nasdaq: HYFM)
Hydrofarm Holdings
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Hydrofarm Holdings is a distributor of controlled environment agriculture equipment and supplies. They sell lighting; atmospheric controls; hydroponics; nutrients and additives; growing media; plant care and pest and disease control; seed starting and cloning; garden accessories; and food storage products.
Is HYFM a buy opportunity?
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Hydrofarm Holdings Fundamental Analysis
Profile
HQ: Fairless Hills, PA, USA
Founded: 1977
Symbol: HYFM (Nasdaq)
Focus: Strong
Hydrofarm is a distributor of all the items necessary to grow plants, including cannabis and hemp. They have over 40 years of experience in doing this. They are based out of Pennsylvania, USA. Much of their business is wholesale and they carry over 5,000 items.
Size: Strong
Market Cap: US $2.12 billion
Enterprise Value: $2.08 billion
# of employees: 209
Markets: Neutral
Secondary: Canada
Majority Subsidiaries: Field 16 LLC; SunBlaster Holdings; Allied Imports; Aurora Innovations; Humboldt Wholesale; EHH Holdings; Hydrofarm Investment; House & Garden; Gotham Properties; Hydrofarm Canada
Operations: Neutral
Cultivation: None
Distribution: They specialize in the distribution and wholesale of over 5,000 products. They have six distribution centers in the USA and two in Canada although their brands are in hundreds of retail locations.
Integration/Diversification:
Vertically integrated: No
Horizontally diversified: Yes
Financials: Strong
Revenue (ttm): $386.7 million
Outstanding shares (diluted): 43.93 million
Valuation: Strong
Current share price: US $49.98
52 week high/low: $41.59-95.48
Price to Sales: 3.23
EV/Revenue: 5.38
Price/book: 10.01
Financing: Neutral
They have over $60 million in cash with less than $20 million of debts. Their operating cash flow is -$45.7 million though.
Risks: Medium
The risks of investing in any cannabis company are very high given the immaturity of the market and all competitors. This company has fewer risks in that they have no extra regulations that cannabis companies have, they have high revenue, and strong leadership.
Hydrofarm Holdings Investor Overview Video
Hydrofarm Holdings Technical Analysis
Should I Buy Hydrofarm Holdings Stock?
Follow Stephen Goldman as he evaluates Hydrofarm Holdings using the Golden Cross Indicator, the Aroon Up/Down, and the MACD.
Is there a buy opportunity with HYFM?
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Bottom Line: Should I Buy Hydrofarm Holdings Stock?
Recommendation: Strong
Hydrofarm Holdings sells high volumes of nutrients, hydroponics, cultivation equipment and grow equipment. They have a strong wholesale business.
They’ve recently done some acquisitions (Heavy 16, and House & Garden) to raise the already strong brand offerings that they carry at their retail and distribution stores. Currently they have over 5,000 items in stock.
Their CEO, William Douglas Toler, comes from Hostess Brands where he turned them around to profitability. He guided them to over 50% gains in their stock price.
This company only went public at the end of 2020. Since then their price jumped to the mid 90s and then dropped to where it is now, just under $50 per share. There could be some value at this price.
They have around $309 million from selling an additional 5.5 million shares at $59 in May 2021 and should use this to continue their string of acquisitions. They have strong revenue growth QoQ and strong estimates of revenue growth for the next two years. For all these reasons we give them a Strong rating.