Author Topic: MMMB - Mamamancini's Holdings Inc  (Read 1422 times)

fishwithwings

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MMMB - Mamamancini's Holdings Inc
« on: April 03, 2020, 02:47:31 PM »
Anyone have any thoughts on this stock? Alta Fox Capital worte it up recently https://www.altafoxcapital.com/research
« Last Edit: April 12, 2020, 12:59:14 AM by Parsad »


DTEJD1997

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Re: MMMB - mamamancini's Holdings Inc
« Reply #1 on: April 03, 2020, 03:27:09 PM »
Hey all:

I've looked at this several times and have tried their products a couple of times.

Their meatballs are good, better than average...but not stupendous.

The company situation is much better now than it was 3-4 years ago.  They are about to make money possibly.  Sales are growing.

HOWEVER, I would argue there is a better company in the prepared Italian foods sector.  That would be Aramino Foods of Distinction (AMNF).  They main product is pesto sauce, but they are also diversified into ravioli and other such things.

AMNF has a fortress like balance sheet, good dividend...a well run company.

CSP2014

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Re: MMMB - mamamancini's Holdings Inc
« Reply #2 on: April 12, 2020, 12:22:33 AM »
AMNF has exposure to restaurants, which will be crushed. It is also much more expensive than MMMB and is not growing nearly as fast.
Finally, MMMB has significant underutilized manufacturing capacity whereas AMNF is already earning a very healthy 20%ish EBITDA margin.

AMNF has been a solid historical performer but MMMB is cheaper, growing faster, and a better bet going fwd IMO.

lemsinge

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Re: MMMB - Mamamancini's Holdings Inc
« Reply #3 on: May 20, 2020, 08:00:12 AM »
I've recently began looking at the company and like it, despite it running up substantially in the market rally.

I think Managements goal of $15-25mm of revenue per year is too aggressive, but believe is could be possible if they are able to fully penetrate Costco/Kroger/Target/Walmart. They've mentioned Costco can offer a $20-25mm revenue opportunity per SKU, and I believe the other large grocery stores that they've yet to grow into provide similar revenue opportunities. Even still, with $7.5mm of revenue growth a year, I can see this as a good investment

They have recently noted that incremental operating profit is 20-25% which bodes well as revenue continues to grow. I think its likely this company has EBITDA margins in the high teens once the plant is properly/efficiently utilized.

I don't know how, but the companies days payable ratio looks to high (~60x vs. Armanino's Low 20x), I think this will come lower as the years go by, requiring an increased working capital investment as payable's do not grow with inventory/receivables.

I've yet to try there food but plan on doing that soon. From a quick glance, it seems that MMMB has better reviews on Facebook than its competitors and a decent "cult-like" following base.

I'm not a fan of the executive risk in this one, with Carl Wolfe being 76 and Dan Mancini required to be there as the face of the brand. Makes me think there is a chance of them selling once their runway stats to shrink, but that may not be for a while.

Always tough for me to gauge the margin of safety on companies like this, would love to hear peoples thoughts regarding that.

fishwithwings

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Re: MMMB - Mamamancini's Holdings Inc
« Reply #4 on: May 20, 2020, 08:06:42 AM »
I think you are really paying for growth and don't really have a margin of safety.  But who am I to talk... I thought the same thing at $1.3.

lemsinge

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Re: MMMB - Mamamancini's Holdings Inc
« Reply #5 on: May 20, 2020, 03:46:26 PM »
I think you are really paying for growth and don't really have a margin of safety.  But who am I to talk... I thought the same thing at $1.3.

Yes, it does seem like that. I've tried taking a crack at estimating what the market is currently pricing into the stock over next 5 years with a quick model, and have come up with the following assumptions:
- Revenue grows at $7.5mm/year for 5 yrs
- EBIT margins move to 13% at exit year. A quick rationality check is to look at incremental revenue and how it flows to EBIT based upon Management's 20-25% incremental run rate comment. $7.5mm per year for five years gets me to $72mm in revenue, or a $37.5mm incremental gain. @ 20% EBIT margin, this is an incremental EBIT of $7.5mm, or ~$9mm in total EBIT (They earned $1.3mm last year). This gets me to a 13% EBIT margin
- Use of its NOLs
- Working capital investment as days payable ratio declines
- Increase in CapEx once plant reaches ~70-80% capacity, as management will likely think they can grow past the $75mm level. Long-term, I have CapEx $500k higher than D&A to be conservative.
- WACC @ 10% (arbitrarily)
- LT growth rate of 1% based upon current 10yr breakeven inflation
- growth is entirely organic

Now, due to all the operating leverage, slight tweaks to this and I suddenly get 50% upside to fair value ($10mm in revenue growth with EBIT margins moving to 15-16%). There is likely also potential this doesn't reach its runway after 5 years, but keeps going. Granted, this can also hurt investors in the other direction (flat revenue and the inability for margin expansion).

Message me and I will happily share the model.

Foreign Tuffett

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Re: MMMB - Mamamancini's Holdings Inc
« Reply #6 on: May 21, 2020, 07:53:00 AM »
We know that AMNF's pesto product has relatively high switching costs due to restaurants being reticent to change their recipes. Is there anything similar here?  What is the secret sauce (sorry for the bad joke)?