Company Overview
Farmmi, Inc. operates as a processor and seller of agricultural products, specifically focusing on the cultivation and distribution of edible fungi such as Shiitake mushrooms, Mu Er mushrooms, bamboo fungi, agrocybe aegerila, and pleurotus across international markets including China, the United States, Japan, Canada, Europe, Korea, and the Middle East. The company functions within the Consumer Defensive sector, specifically under the Packaged Foods industry, which typically implies a business model focused on providing essential goods with potentially lower sensitivity to economic cycles compared to discretionary spending. Farmmi, Inc. is a micro-cap entity with a market capitalization of $17.13M, generating annual revenue of $27.97M while employing a workforce of 15 individuals. The combination of a market cap under $20 million and annual revenue under $30 million indicates that Farmmi, Inc. operates on a very small scale relative to established peers in the packaged foods industry, suggesting a nascent stage of operation or a highly niche specialization rather than broad market penetration.
Financial Health
The company reported revenue of $27.97M for the trailing twelve months, yet it simultaneously recorded a net income of -$53,098,648 and an EBITDA of -$47,020,984. The substantial gap between the reported revenue of $27.97M and the net loss of approximately $53.1M reveals a cost structure where expenses, likely including significant one-time charges or severe operational inefficiencies, vastly exceed income, resulting in a profit margin of -189.8%. Despite the negative net income and EBITDA, the company maintains a free cash flow of $43.90M, which provides a layer of financial flexibility that allows the firm to meet immediate obligations without relying on external financing despite its operating losses. The gross margin stands at 2.9%, indicating that the company retains a very small portion of sales revenue after direct costs of goods sold, while the operating margin of -393.8% and profit margin of -189.8% highlight severe structural or non-operational issues impacting profitability. On the balance sheet, the company holds $803,477 in cash against $20.77M in debt, resulting in a debt-to-equity ratio of 16.77 which suggests a highly leveraged position where liabilities significantly outweigh equity. However, the current ratio of 9.35 indicates strong short-term liquidity, meaning the company possesses nearly ten times the current assets needed to cover its current liabilities, potentially masking the underlying solvency risks presented by the high debt load. Return on Equity is -36.3% and Return on Assets is -17.7%, metrics that reveal management has not been effective in generating profits from the shareholder capital or the total asset base utilized.
Valuation Assessment
Valuation metrics for Farmmi, Inc. are constrained by its lack of earnings, as the trailing twelve-month P/E ratio is N/A and the forward P/E is also N/A. The absence of both trailing and forward P/E ratios implies that traditional earnings-based valuation methods are inapplicable, preventing investors from assessing the company based on expected earnings trajectory or future profitability. Instead, the price-to-book ratio is 0.05, indicating that the market values the company's equity at a fraction of its book value, which often occurs when intangible assets or goodwill are significant, or when the company faces substantial liabilities not fully reflected in book value. Alternative valuation metrics such as the price-to-sales ratio of 0.61 and an EV/EBITDA of -0.78 suggest that the market is pricing the stock based on sales generation rather than profitability, though the negative EV/EBITDA underscores the current inability to cover operating expenses before interest and taxes. The stock has traded between a 52-week high of $2.22 and a 52-week low of $1.11, and given the price-to-book ratio of 0.05, the current market price sits at a level significantly below the historical range, reflecting extreme market skepticism regarding future cash flow potential. The beta value is 1.72, meaning the stock exhibits high volatility relative to the broader market, moving 72% more than the average market index and amplifying price swings during periods of market instability.
Growth & Income
Farmmi, Inc. experienced a revenue growth of -57.3% year-over-year, while the earnings growth rate is N/A due to the company's persistent losses. The decline in revenue of -57.3% combined with the absence of positive earnings growth implies that the company is shrinking in sales volume while simultaneously failing to generate any profit, indicating a deteriorating business model rather than a temporary setback. As a non-dividend payer, the company reports a dividend yield of N/A and a payout ratio of 0.0%, which means there are no cash dividends distributed to shareholders, and any retained earnings are theoretically available for reinvestment or debt reduction, though the negative net income limits the capacity to fund organic growth internally. The overall growth and income profile for Farmmi, Inc. is characterized by significant revenue contraction, a complete absence of profitability, and a reliance on existing cash reserves to sustain operations in the face of negative operating margins and high leverage.