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Hydrofarm Holdings Group Inc (HYFM)
:HYFM

Hydrofarm Holdings Group (HYFM) AI Stock Analysis

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Hydrofarm Holdings Group

(NASDAQ:HYFM)

Rating:44Neutral
Price Target:
$3.50
▼(-3.58%Downside)
Hydrofarm Holdings Group's overall stock score reflects significant financial challenges, with declining revenues and persistent losses as major concerns. Although there are ongoing efforts to improve profitability through cost savings and strategic initiatives, the negative valuation and uncertain market conditions weigh heavily on the stock's appeal. Technical indicators provide some short-term optimism, but broader industry and tariff issues continue to pose risks.

Hydrofarm Holdings Group (HYFM) vs. SPDR S&P 500 ETF (SPY)

Hydrofarm Holdings Group Business Overview & Revenue Model

Company DescriptionHydrofarm Holdings Group (HYFM) is a leading distributor and manufacturer of hydroponics equipment and supplies for controlled environment agriculture, including indoor and urban gardening. The company offers a comprehensive range of products such as lighting solutions, climate control systems, growing media, and plant nutrients, catering to both commercial and hobbyist growers. Hydrofarm operates primarily in the United States and Canada, serving the burgeoning market for innovative agricultural solutions that enhance crop yield and quality.
How the Company Makes MoneyHydrofarm Holdings Group generates revenue through the sale of hydroponics equipment and supplies. The company's primary revenue streams include the distribution of proprietary and third-party branded products to a wide network of retailers, commercial growers, and other end-users. Hydrofarm collaborates with a variety of vendors and manufacturers to offer a diverse product portfolio, ensuring a steady supply chain and product availability. Additionally, the company benefits from strategic partnerships and acquisitions that expand its product offerings and market reach. Factors such as increasing interest in sustainable agriculture and the growing legal cannabis market have significantly contributed to Hydrofarm's earnings by driving demand for its products.

Hydrofarm Holdings Group Earnings Call Summary

Earnings Call Date:May 13, 2025
(Q1-2025)
|
% Change Since: -4.72%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Negative
The earnings call highlighted improvements in proprietary brand sales mix and cost savings, but was overshadowed by a significant decline in net sales, negative free cash flow, and uncertainties related to tariffs and industry challenges.
Q1-2025 Updates
Positive Updates
Improved Proprietary Brand Sales Mix
Proprietary brand sales mix improved from 52% in Q4 2024 to 55% in Q1 2025, driving a substantial improvement in adjusted gross profit margin.
Cost-Saving Measures
11th consecutive quarter of adjusted SG&A expense savings, with an 11% reduction compared to the previous year, largely in people costs and facility expenses.
Adjusted EBITDA Improvement
Adjusted EBITDA improved by $4.8 million compared to Q4 2024, indicating better sequential performance.
Cash and Liquidity Position
Maintained a cash balance of $13.7 million with total liquidity of $31 million, including $17 million of availability on a revolving line of credit.
Negative Updates
Significant Decline in Net Sales
Net sales for Q1 2025 were $40.5 million, down 25.2% year-over-year due to a 22.6% decrease in volume mix and a 1.8% decline in pricing.
Negative Free Cash Flow
The first quarter experienced negative free cash flow of $12 million, with cash used in operating activities amounting to negative $11.8 million.
Tariff Uncertainty
Uncertainty surrounding tariffs, particularly from China, affecting durable goods and leading to the withdrawal of full-year guidance for net sales, adjusted EBITDA, and free cash flow.
Prolonged Industry Challenges
Continued challenges from industry oversupply, lack of government progress on regulatory issues, and consolidation across the retail customer base.
Company Guidance
During the first quarter of 2025, Hydrofarm Holdings Group focused on improving profitability by emphasizing higher-margin proprietary brands, which made up 55% of net sales compared to 52% in the previous quarter. Despite a 25.2% year-over-year decline in net sales to $40.5 million, driven by a 22.6% decrease in volume and a 1.8% decline in pricing due to an oversupply in the cannabis industry, the company achieved a sequential improvement in adjusted EBITDA each month within the quarter. Adjusted gross profit was $8.5 million, representing 21% of net sales, a notable increase from 17% in the fourth quarter of 2024. The company also reported its 11th consecutive quarter of significant year-over-year adjusted SG&A savings, with an 11% reduction to $11 million. However, due to tariff uncertainties and industry challenges, Hydrofarm withdrew its full-year 2025 guidance for net sales, adjusted EBITDA, and free cash flow, despite having $31 million in total liquidity at the end of the quarter. The company is conducting a thorough review of its product portfolio and distribution network to align with sales demand and enhance margins amid ongoing trade complexities.

Hydrofarm Holdings Group Financial Statement Overview

Summary
Hydrofarm Holdings Group is facing financial challenges with declining revenues, persistent losses, and negative cash flow trends. The balance sheet reflects moderate leverage but weakening equity ratios, indicating the need for strategic changes to improve profitability and cash generation.
Income Statement
40
Negative
Hydrofarm Holdings Group has experienced declining revenues over recent periods, with the TTM showing a further decrease to $176.65 million from $190.29 million the previous year. The gross profit margin in the TTM is 12.99%, which is relatively low for the industry. The company is also facing significant losses, with a net profit margin of -38.76% and a negative EBIT margin of -23.79%, reflecting operational inefficiencies and high costs.
Balance Sheet
50
Neutral
The company's balance sheet indicates a modest debt-to-equity ratio of 0.80, which suggests manageable leverage. However, the equity ratio has decreased to 51.14% in the TTM, indicating a potential weakening in asset financing through equity. The return on equity is negative at -32.62%, highlighting challenges in generating returns for shareholders.
Cash Flow
35
Negative
Cash flow performance is concerning, with negative operating cash flow in the TTM and a significant decrease in free cash flow growth. The operating cash flow to net income ratio is unfavorable, indicating insufficient cash generation from operations to cover net losses.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue176.65M190.29M226.58M344.50M479.42M342.20M
Gross Profit22.94M32.13M37.61M29.34M101.49M63.63M
EBITDA-30.31M-19.92M-17.51M-229.62M17.01M13.69M
Net Income-68.49M-66.72M-64.81M-285.42M13.42M-7.27M
Balance Sheet
Total Assets410.56M426.10M507.64M573.56M891.24M275.80M
Cash, Cash Equivalents and Short-Term Investments13.73M26.11M30.31M21.29M26.61M75.18M
Total Debt167.44M169.53M183.93M186.07M167.57M20.06M
Total Liabilities200.61M202.38M217.03M223.68M256.06M64.88M
Stockholders Equity209.94M223.72M290.61M349.88M635.18M210.92M
Cash Flow
Free Cash Flow-8.62M-3.22M2.83M13.76M-50.47M-46.33M
Operating Cash Flow-9.79M-324.00K7.04M21.99M-45.07M-44.83M
Investing Cash Flow2.83M1.67M-4.17M-8.49M-468.18M546.00K
Financing Cash Flow-2.83M-4.78M6.07M-20.20M464.71M88.14M

Hydrofarm Holdings Group Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price3.63
Price Trends
50DMA
3.47
Positive
100DMA
3.51
Positive
200DMA
5.00
Negative
Market Momentum
MACD
0.06
Positive
RSI
50.81
Neutral
STOCH
38.54
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HYFM, the sentiment is Neutral. The current price of 3.63 is below the 20-day moving average (MA) of 3.66, above the 50-day MA of 3.47, and below the 200-day MA of 5.00, indicating a neutral trend. The MACD of 0.06 indicates Positive momentum. The RSI at 50.81 is Neutral, neither overbought nor oversold. The STOCH value of 38.54 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HYFM.

Hydrofarm Holdings Group Risk Analysis

Hydrofarm Holdings Group disclosed 68 risk factors in its most recent earnings report. Hydrofarm Holdings Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Hydrofarm Holdings Group Peers Comparison

Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
58
Neutral
HK$10.50B4.22-2.96%7.40%3.76%-51.26%
56
Neutral
$11.55M349.232.35%-19.47%
56
Neutral
$11.55M349.232.35%-19.47%
44
Neutral
$16.85M-28.07%-19.18%-12.03%
38
Underperform
$3.98M-146.60%12.08%25.82%
37
Underperform
$8.48M-33.60%-59.43%2.40%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
HYFM
Hydrofarm Holdings Group
3.63
-3.02
-45.41%
ARTW
Art's-Way Manufacturing Co
2.27
0.62
37.58%
ARTW
Art's-Way Manufacturing Co
2.27
0.62
37.58%
VAPE
CEA Industries
10.57
3.86
57.53%
UGRO
urban-gro
0.31
-1.09
-77.86%

Hydrofarm Holdings Group Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
Hydrofarm Holdings Appoints New Board Member, Amends Charter
Neutral
Jun 13, 2025

On June 9, 2025, Hydrofarm Holdings Group, Inc. appointed B. John Lindeman to its board of directors, filling the vacancy left by Richard D. Moss. Concurrently, the company made amendments to its charter, retiring and eliminating references to 7,725,045 shares of Series A Preferred Stock, which were converted into common stock, and reducing the authorized shares of Series A Preferred Stock.

The most recent analyst rating on (HYFM) stock is a Hold with a $0.75 price target. To see the full list of analyst forecasts on Hydrofarm Holdings Group stock, see the HYFM Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Hydrofarm Reports Q1 2025 Financial Results Amid Challenges
Negative
May 13, 2025

On May 13, 2025, Hydrofarm Holdings Group announced its first-quarter financial results, highlighting a decrease in net sales to $40.5 million from $54.2 million in the previous year, primarily due to an oversupply in the cannabis industry. Despite the decline in sales and gross profit margins, the company achieved significant cost savings through restructuring and strategic focus on higher-margin proprietary brands, which increased to 55% of sales. The company also reported a net loss of $14.4 million, up from $12.6 million, and withdrew its full-year 2025 outlook due to macroeconomic uncertainties and industry challenges. Hydrofarm remains committed to improving profit margins and strengthening its financial position through continued cost-saving measures and strategic initiatives.

The most recent analyst rating on (HYFM) stock is a Hold with a $0.75 price target. To see the full list of analyst forecasts on Hydrofarm Holdings Group stock, see the HYFM Stock Forecast page.

Executive/Board Changes
Hydrofarm Revises CEO Severance Compensation Terms
Neutral
Apr 17, 2025

On April 15, 2025, Hydrofarm Holdings Group amended its Offer Letter with CEO B. John Lindeman, revising his severance compensation terms. The amendment outlines cash severance payments and accelerated equity vesting in the event of termination, particularly following a change of control, impacting the company’s executive compensation strategy.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 03, 2025