Key insights
- An analyst provides a DCF valuation of Vital Farms (VITL) under bull, base, and bear case scenarios, resulting in fair values ranging from $22 to $80. Despite strong revenue growth, the stock price has declined significantly. The analyst questions whether negative EPS growth in 2026 justifies the valuation disconnect, suggesting the stock may be undervalued. This could signal potential upside for the stock.
Continuing my analysis on Vital Farms, I tried to run, conservatively, a three-scenario DCF on Vital Farms:
- Bull case (as per guidance of 13% EBITDA margin in 2026, management hits their own $2B revenue target by 2030) implies ~$80 fair value. * Base case (missed 2026 guidance with 11% EBITDA margin, 2030 revenue lands at $1.6B) still implies ~$46 fair value. * Bear case (2026 EBITDA margin never reaches guidance at 10%, revenue grows only to $1.3B by 2030) implies ~$22 fair value.
Stock has been drifting a lot lower despite 25% revenue growth in 2025 and a reaffirmed $2B target. Negative EPS growth is expected in 2026 due to CapEx, but is this enough to justify more than 50% loss in value?
Viital market cap is currently ~$580M, while bringing in revenue of ~$750M in 2025.
I don't think I have seen a bigger disconnect. Am I missing anything here?
Happy to be proven wrong and shown where my assumptions are not justified. I am quite new to DCF valuation.
Full calculation and breakdown: https://open.substack.com/pub/stefanliemawan/p/vital-farms-what-is-13-actually-worth?utm_source=share&utm_medium=android&r=2wzuop