Goldman Sachs has begun coverage of BBB Foods, identified by its stock ticker TBBB, assigning it a Neutral rating and a price target of $29. The company stands out as a "rare compounder" within Goldman Sachs' coverage of Latin American retail, according to analysts. However, this potential is already accounted for in the present valuation, which is 91 times the anticipated forward earnings.
TBBB Key Business Developments
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BBB Foods Inc (TBBB, Financial) reported a strong increase in total revenues by 35% to 17 billion pesos.
- The company opened 117 net new stores, bringing the total to 2,889 stores, indicating robust expansion.
- Same store sales grew by 13.5%, showcasing strong performance in existing locations.
- Cash flow from operating activities increased by 49% year over year, reaching 1.1 billion pesos.
- The company maintains a strong net cash position of approximately 1.6 billion pesos, with an additional $150 million in US dollars.
Negative Points
- Sales expenses as a percentage of revenue slightly increased from 10.2% to 10.3%, due to the accelerated pace of store openings.
- Administrative expenses rose by 60 basis points from 3.5% to 4.1%, partly due to increased share-based payments.
- The margin decreased from 4.9% to 4.1% as a result of increased investments to support growth.
- There is a significant increase in share-based compensation, which reached nearly 8% of gross profit, raising concerns about future dilution.
- The company faces challenges in a tough consumer environment, although it claims resilience due to its value proposition.
