Why edible garden stocks are rising today

Edible Garden AG Incorporated (NASDAQ:EDBL) shares are rising today after reporting first-quarter FY24 results.

Revenue rose 27.6% year over year to $3.1 million, missing the $3.2 million consensus. The sales growth was due to increased customer demand for cut and potted herb products and the expansion of the product range.

Gross profit increased 195.8% year-over-year, with margin expansion of 171 basis points, as the company began to realize the benefits of the previously implemented strategic change.

Selling, general and administrative expenses increased to $3.9 million from $2.7 million a year ago due to a one-time severance package and higher audit, accounting and legal costs related to the departure of the previous Chief Financial Officer.

The company has broken away from third-party growers, with Edible Garden now producing approximately 95% of its fresh produce line in company-owned facilities. An earnings per share loss of $(13.65) missed the street mark of $(7.60).

During the quarter, Edible Garden partnered with Uncle Giuseppe’s Marketplace to distribute Edible Garden spices across their New York and New Jersey locations. In addition, the company has signed a three-year contract with an American food retailer. The company expects the contract to generate approximately $18 million to $20 million in revenue over the initial term.

Jim Kras, Chief Executive Officer of Edible Garden, “In early March 2024, we expanded our distribution through KeHE Distributors, a leading distributor of natural, organic, specialty and fresh products, and in April we added UNFI Distributors, one of the North US distributors. America’s Best Wholesalers of Health and Specialty Foods.”

“Earlier this month, we entered into a product development agreement with Hermann Pickle Company, a leader in refrigerated kosher dill pickles, sauerkraut and other fermented foods that have been a staple at delis and dinner tables across the country for generations.”

In April, Edible Garden reported preliminary first-quarter year-over-year sales growth of 40% and an increase in cut herb revenue of more than 200% compared to the same period last year.

Price promotion: EDBL shares are up 23.4% to $5.27 at last check on Wednesday.

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