Blue Apron Holdings, Inc. (APRN) in New York City operates a direct-to-consumer platform that delivers original recipes with fresh and seasonal ingredients. It also operates Blue Apron Market, an e-commerce market that provides cooking tools, utensils, pantry items, and other products. APRN shares have slumped 62.3% in price over the past six months and 50.1% year-to-date to close the last trading session at $3.36.

The stock registered significant gains last week, however. APRN shares jumped after the company announced its capital investment and refinancing moves totaling a $70.50 million planned capital infusion. On May 2, 2022, the company announced its agreement regarding a new $40 million private placement investment by RJB Partners LLC, an affiliate of Joseph N. Sanberg and a long-time investor in the APRN. It has also secured a$500,000 private placement investment by Blue Apron’s President and Chief Executive Officer Linda Findley. Furthermore, APRN announced its plans to refinance its existing debt with $30 million of senior secured notes issued to clients of Allianz Global Investors, to meet its debt obligations and extend its debt maturity to 2027.

“The proceeds from the closed transactions and expected additional debt and equity fundings support our continued turnaround as we drive towards long-term sustainable and profitable growth,” Findley said. The stock has gained 11.6% since this announcement.

Here is what could shape APRN’s performance in the near term:

Declining Financials

APRN’s revenue has declined at a 10% CAGR over the past five years and 11% over the past three years.

For its fiscal first quarter, ended March 31, 2022, the company’s net revenue has decreased 9.2% year-over-year to $117.75 million, due primarily to a decline in customers and orders, which was partially offset by an increase in its average order value. Its loss from operations increased 173.7% from the year-ago value to $38.31 million. APRN’s net loss came in at $38.45 million, reflecting a 144.6% increase from the prior-year quarter, while its net loss per share grew 35.2% year-over-year to $1.19. Its adjusted EBITDA stood at a negative $30.74 million, compared with the negative $6.06 million year-ago value, and its free cash flow was negative $30.12 million, compared with negative $13.70 million in the first quarter of the prior year.

Poor Profitability

APRN’s EBITDA margin and net income margin of negative 10.40% and 18.79%, respectively, are substantially lower than the 12.60% and 5.28% industry averages. Its negative 2.97% levered FCF margin is lower than the 4.32% industry average.

Furthermore. the company’s ROE, ROA, and ROTC of negative 122.73%, 38.14%, and 32.03%, respectively, compare with the 3.57%, 4.95%, and 6.97% industry averages.

Street Expects Improvement

Analysts expect the company’s revenues to increase 8.5% in the quarter ending June 30, 2022, 17.5% in the next quarter, and 13.2% in the fiscal year ending Dec. 31, 2022. The Street expects its revenues to come in at $134.60 million in the current quarter. Also, the company’s EPS is expected to grow 50% in the current quarter, 38.5% in the quarter ending Sept, 30,  2022, and 41.3% in the current year. However, its EPS is expected to remain negative at least this year.

POWR Ratings Reflect Uncertainty

APRN has an overall C rating, translating to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a grade of D for Stability, which is consistent with its beta of negative 3.42.

APRN has a C grade for Sentiment. Although analysts expect improvement in APRN’s financials, its EPS is expected to remain negative, which justifies the Sentiment grade.

Among the 72 stocks in the  Internet industry, APRN is ranked #39.

Beyond what I have stated above, one  can also view APRN’s grades for Quality, Growth, Momentum, and Value here.

View the top-rated stocks in the Internet industry here.

Bottom Line

Although the company’s recent capital investment and refinancing moves excited investors, its weak financial positioning is concerning. Moreover, increasing competition in the meal kit space could narrow the company’s prospects. Thus, we think it could be wise to wait and see how the company takes advantage of these new financing moves and improves its business before investing in the stock.

How Does Blue Apron Holdings, Inc. (APRN) Stack Up Against its Peers?

While APRN has an overall POWR Rating of C, one  might want to consider taking a look at its industry peers, Yelp Inc. (YELP), which has an A (Strong Buy) rating, and trivago N.V. (TRVG) and Travelzoo (TZOO) which have a B (Buy) rating.

Note that TRVG is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.

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