Freshii Stock Price Doesn't Reflect Its True ValueA health food chain has found itself in hot water after a scandal involving its virtual cashier. The company's practices have been condemned by many‚ and People have threatened to stop eating their Freshii salads until the virtual cashier is gone. However‚ the company's share price doesn't seem to reflect its true value. In the following article‚ we will discuss Freshii's business practices and the consequences.
People vow to give up their salads until virtual cashiers disappear foreverEconomists predict that a large number of cashier jobs will be eliminated in the next decade. The number of jobs that will be eliminated depends on several factors‚ including consumer preferences‚ companies' desire to reduce prices and the next recession. One economist‚ Kristen E. Broady‚ says the number of cashier jobs will disappear is highly variable‚ but will probably be in the millions.
Government restrictions on restaurants have forced many to turn to technology to comply with lockdown rulesIn response to the widespread panic‚ Austria has implemented a national lockdown. Unvaccinated People will be barred from essential businesses such as supermarkets‚ pharmacies‚ and other places where food is sold. In addition to the ban on non-essential shops‚ Austrians will be required to work from home‚ and non-essential shops will close at midnight. The new restrictions sparked protests across the continent‚ resulting in clashes with police. Infection rates on the continent have skyrocketed and the World Health Organization has warned that half a million People could die by next spring if People don't get the vaccinations. In a recent report by David Leonhardt in the New York Times‚ the government imposed progressively more restrictive measures to deal with the epidemic. Ten towns in Lombardy and one in Veneto were placed under strict quarantine‚ and schools were closed in the affected regions. Those who disobeyed the government's order could be fined up to 206 euros or even served with three months in prison. Some businesses in these areas were permitted to operate‚ but only for the most essential needs such as work‚ shopping‚ and health.
Earnings of Freshii's virtual employeeThe Toronto-based purveyor of healthy soups and salads reported a loss of US$491‚000 in the fourth quarter ended Dec. 25 compared to a loss of five cents per share in the same quarter last year. Freshii also wrote in its earnings release that certain assumptions made during its fourth-quarter financial report no longer apply‚ so the company will not provide an updated same-store sales outlook. It is not clear how long Freshii has been operating its virtual cashier program. However‚ recent news reports indicate that it has been running since November‚ and has caused a firestorm on social media. Many have questioned the future of work‚ and many have vowed to boycott the company until its virtual cashier program is discontinued. The economic climate in Canada over the past two years may have played a part in this development. The company's CPG business‚ which sells healthy on-the-go foods‚ remained strong in the fourth quarter of 2021. Sales of the company's energii bite and elixir shot products were up by a combined 135% year-over-year in Q4 2021. In addition‚ Freshii's CPG business‚ which includes Walmart‚ Shell‚ ONroute‚ and a host of other grocery stores‚ saw its net income grow by a staggering 90 percent. Freshii's omnichannel approach to wellness has enabled the company to become an omnichannel health and wellness company. Through its restaurant division‚ the brand's menu is customizable and eco-friendly‚ while its CPG offerings allow it to reach more customers at multiple touchpoints. Freshii also owns a majority interest in the fast-growing health and wellness ecommerce retailer Natura Market. In addition to its restaurants‚ Freshii also sells nutritional supplements online and in-store. Natura Market's sales rose by 12% year-over-year last year. Despite the large size of Natura‚ the two companies share a similar mission. Founder Matthew Corrin plans to stay on as Natura's president and CEO‚ and the two companies' mission is aligned.
Share price doesn't reflect valueOne of the most compelling arguments for investing in a growth company is that the share price doesn't reflect its intrinsic value. Luckily‚ Freshii has a compelling growth story to tell and a low share price. However‚ the company has a very high beta‚ meaning that its price movements are exaggerated and it will fall much more than the market average. Hence‚ it's best to consider the company's prospects before making a decision. In the third quarter‚ Freshii's same-store sales declined by 0.8%‚ compared with a 5.1% decline a year earlier. The company attributed the slow sales to its own sales efforts and will not provide an updated same-store sales forecast in the near future. The company will be buying back more shares to boost its stock price. In addition‚ its guidance for same-store sales growth has also been lowered. The market cap of a public entity is calculated by multiplying its stock price by the number of shares outstanding. This method is known as enterprise value‚ and it's used to determine whether a company's share price is reflective of its worth. However‚ the process is not as straightforward as calculating the enterprise value of a private company. Instead‚ investors need to consider balance sheet items such as long-term debt‚ book value of preferred stock‚ and minority interest. While Freshii is not a large cap company‚ its stock price has risen by over 20% over the past year. This has created a buying opportunity for investors who may otherwise pass up on the opportunity. The shares have received attention from Wall Street analysts in recent months due to the company's aggressive deals to serve food on Air Canada flights‚ and are now expanding to gas stations and shopping malls. Analysts at CIBC downgraded the stock to an underperform rating and set a price target of $2.75. The analysts wrote that Freshii's results reflect a significant deceleration from its previous results.
Many Freshii customers have already encountered “Percy” — a video-calling device attached to cash registers at some locations in Ontario. Behind the screens are workers thousands of kilometres away in Nicaragua, making $3.75 per hour. https://t.co/SjxRtOD9aU — Toronto Star (@TorontoStar) April 26, 2022