Vital Farms (VITL) Stock Evaluation

Vital Farms, Inc. is an American food company founded in 2007 and headquartered in Austin, Texas that focuses on ethically produced eggs and butter from a network of family farms. Operating as a certified B Corporation and a public-benefit corporation, it emphasizes animal welfare, sustainable pasture-raising and full supply‐chain transparency. The brand sells its products in over 23,000 retail stores across the U.S. and partners with hundreds of family farms to bring “pasture-raised” eggs and other products to market. Its business model aims not only for profitability but also to support farmers, animals, the land and local communities through a stakeholder-oriented approach.

Vital farms is one of the most exciting new companies in an industry run by giants. It aims to flip the script by introducing products that are produced more ethically, with a focus on stakeholders rather than shareholders. While this may at first seem contrary to what you would look for in a company to invest in, we have seen that this stakeholder fist view has led to more brand awareness, a differentiated product, and ultimately more profit.

The model's baseline assumptions represent extremely strong growth projections, though they are still below Capital IQ's consensus projections. Even with these strong projections, the valuation comes out just 3% above the current share price. Despite this, the company is trading at a modest, for its growth, 25x P/E. Projections place EPS at about $2/share for 2027, assuming this can be fulfill, even at a 20x P/E, the company will be trading at $40/share, or a 22% upside. The company has been focusing heavily on expanding through building out more farms and production facilities to further increase its quantity of products sold and to raise margins through economies of scale. The final deciding factor that led to our decision to invest into Vital Farms is their designation as a B-Corp and their attitude towards ethical farming and sustainability. We truly believe in the work the company is doing to improve the ethic behind farming and to shake up a stagnant industry. In the long-term consumer sentiment has been and will continue to shift towards a mentality of spending slightly more to purchase a good that was produced more ethically or sustainably.

Decision: Invest $500 at $33.10/share