Specialty ingredient company RiceBran Technologies (RIBT) in Scottsdale, Ariz., produces, processes, and markets value-added and natural nutrient-dense products derived from rice and other small grains. The company engages in transforming raw rice bran into stabilized rice bran (SRB) and high-value derivative products.

Recently, RIBT announced plans to double the capacity of its pearling mill at its MGI Grain Inc. facility in East Grand Forks, Minn., with the goal of meeting the growing demand for North American-sourced grain-based ingredients. The company reported spending less than $500,000 on the upgrades, which are expected to be completed later this summer season.

But the stock has declined 36.2% in price over the past year and 8.3% intraday to close yesterday’s trading session at $0.67. However, it has gained 91.4% year-to-date and 15.5% over the past month.

Here are the factors that could affect RIBT’s performance in the near term:

Bleak Bottom Line

For its fiscal first quarter, ended March 31, RIBT’s revenue has increased 22.7% year-over-year to $10.56 million. However, its gross profit has decreased 25.3% from the prior-year quarter to $502,000. Its net income and EPS have declined 356.5% and 400%, respectively, from the same period the prior year to negative $1.52 million and  negative $0.03.

Negative Profit Margins

RIBT’s 0.82% trailing 12-month gross profit margin is 97.6% lower than the 34.63% industry average. Its trailing 12-month EBITDA margin and net income margin of a negative 12.94% and 33.42%, respectively, are significantly lower than their 12.60% and 5.32%industry averages.

The stock’s negative 53.53%, 14.86%, and 35.27% respective trailing 12-month ROE, ROTC, and ROA compare to their 13.57%, 6.52%, and 4.88% industry averages.

Bleak Trailing 12-month Financials

RIBT’s trailing 12-month operating income, net income, and EPS came in at a negative $6.77 million, $11.06 million, and $0.22, respectively. And its  net operating cash flow and levered free cash flow stood at a negative $4.01 million and $1.77 million.

POWR Ratings Reflect Bleak Prospects

RIBT’s POWR Ratings reflect this bleak outlook. The stock has an overall D rating, which equates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

RIBT has a Quality grade of D, which is in sync with its bleak profitability margins. The stock has a C grade for Sentiment. This is justified because its negative $0.03 consensus EPS estimate for the quarter ending June 30, 2022, indicates  a 25% year-over-year improvement. However, its $8.31 million consensus revenue estimate for the same quarter reflects a 1.9% decrease from the prior-year period.

In the 85-stock Food Makers industry, it is ranked #74.

Click here to see the additional POWR Ratings for RIBT (Growth, Value, Momentum, and Stability).

View all the top stocks in the Food Makers industry here.

Bottom Line

Although the company generated revenue growth in its last reported quarter, its bottom line remains bleak. Furthermore, while its EPS is expected to improve in the current quarter, it is expected to remain negative. And its topline is expected to decrease. Also, considering its negative profit margins, I think the stock might be best avoided now.

How Does RiceBran Technologies (RIBT) Stack Up Against its Peers?

While RIBT has an overall POWR Rating of D, one might consider looking at its industry peers, Grupo Bimbo, S.A.B. de C.V. (GRBMF) and Industrias Bachoco S.A.B. de C.V. (IBA), which have an overall A (Strong Buy) rating, and Ajinomoto Co., Inc. (AJINY) and Tyson Foods, Inc. (TSN), which have an overall B (Buy) rating.

RIBT shares fell $0.03 (-4.46%) in premarket trading Friday. Year-to-date, RIBT has gained 91.98%, versus a -14.40% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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