Oatly Group (OTLY) AI Stock Analysis

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Oatly Group

(NASDAQ:OTLY)

46Neutral

Oatly's overall stock score of 46 reflects significant financial challenges, including high leverage and ongoing losses, despite revenue growth. Technical indicators suggest bearish momentum, while valuation metrics highlight potential overvaluation concerns. The earnings call offers some positive aspects, such as profitability improvements and gross margin expansion, but these are offset by lower-than-expected revenue growth and market-specific challenges. The company's future performance hinges on improving cost management and operational efficiencies.

Positive Factors

Market Performance

Absolute sales growth remains superior to U.S. packaged food peers, indicating strong market performance.

Operational Efficiency

Q3's EBITDA upside reflected increasing benefits from supply chain efficiency and product mix.

Risk/Reward Opportunity

Trading at a 60% discount versus U.S. food peers, there is a robust risk/reward opportunity.

Negative Factors

Financial Performance

Return on Equity TTM is significantly negative at -92.07%.

Growth Prospects

More modest growth prospects of the plant-based milk category and oat milk have led to adjusted assumptions for net sales growth and the expected pace of EBIT margin expansion.

Regional Challenges

Europe & International segment sales miss expectations despite an EBITDA beat, suggesting regional challenges.

Oatly Group (OTLY) vs. S&P 500 (SPY)

Market Cap

$278.03M

Dividend YieldN/A

Average Volume (3M)112.67K

Price to Earnings (P/E)―

Beta (1Y)2.15

Revenue Growth4.71%

EPS Growth52.27%

CountryUS

Employees1,482

SectorConsumer Defensive

Sector Strength91

IndustryBeverages - Non-Alcoholic

Share Statistics

EPS (TTM)-6.74

Shares Outstanding29,927,992

10 Day Avg. Volume97,907

30 Day Avg. Volume112,667

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.38

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$17.05

Price Target Upside83.33% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering5

Oatly Group Business Overview & Revenue Model

Company DescriptionOatly Group (OTLY) is a Swedish food company that specializes in the production and distribution of oat-based products. The company is a pioneer in the plant-based dairy alternative sector, with a focus on sustainability and health-conscious offerings. Oatly's core products include oat milk, yogurt, ice cream, and other oat-derived food and beverage items, catering to consumers seeking lactose-free, vegan, and environmentally friendly alternatives.

How the Company Makes MoneyOatly Group generates revenue primarily through the sale of its oat-based products to various customer segments, including retailers, foodservice providers, and direct consumers. The company's key revenue streams include wholesale distribution to grocery stores and supermarkets, partnerships with cafes and restaurants for on-premise consumption, and online sales through e-commerce platforms. Oatly's revenue is driven by the growing demand for plant-based foods as consumers increasingly seek sustainable and health-conscious options. The company also leverages strategic partnerships and collaborations with influential brands and retailers to expand its market reach and enhance brand visibility, which further contributes to its earnings.

Oatly Group Financial Statement Overview

Summary

Oatly Group is experiencing growth in revenue, but profitability and cash flow challenges persist. While there is some improvement in cash flow, the company continues to face significant financial risks due to high leverage and ongoing losses. The focus should be on improving cost management and achieving operational efficiencies to enhance profitability and cash flow generation.

Income Statement

Neutral

Oatly Group has demonstrated revenue growth from $783 million to $823 million, indicating a positive trajectory. However, the company is facing challenges in profitability, with a negative EBIT margin of -22.6% and a negative net profit margin of -24.5%. These negative margins suggest that while the company is growing its top line, it is struggling with cost management and achieving profitability. Despite the gross profit margin improving to 28.7%, the net income remains deep in the red, impacting the overall score.

Balance Sheet

Negative

The debt-to-equity ratio has increased, indicating rising leverage as the company relies more on debt financing. Oatly's equity ratio has decreased, reflecting increased liabilities relative to assets. The company's return on equity is negative, driven by substantial net losses. The balance sheet reflects financial risk due to high debt levels and declining equity, which are concerning factors for financial stability.

Cash Flow

Neutral

Oatly shows improvement in free cash flow growth, reducing from -$235 million to -$156 million. However, the operating cash flow remains negative, highlighting ongoing cash flow challenges. The free cash flow to net income ratio is negative, indicating that the company's cash generation is insufficient to cover its losses. These factors point to potential liquidity challenges, which need careful management.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
823.67M	783.35M	722.24M	643.19M	421.35M
	Gross Profit
236.49M	152.08M	80.03M	155.01M	129.24M
	EBIT
-186.15M	-457.01M	-395.99M	-213.74M	-47.09M
	EBITDA
-86.13M	-287.79M	-355.03M	-172.15M	-34.33M
	Net Income Common Stockholders
-201.95M	-416.87M	-392.57M	-212.39M	-60.36M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
98.92M	249.30M	82.64M	545.51M	105.36M
	Total Assets
803.98M	1.12B	1.23B	1.63B	678.93M
	Total Debt
491.45M	532.84M	151.70M	149.21M	233.45M
	Net Debt
392.53M	283.54M	69.05M	-146.37M	128.09M
	Total Liabilities
697.86M	781.19M	434.05M	383.61M	352.84M
	Stockholders Equity
104.69M	333.99M	791.14M	1.25B	326.09M
Cash Flow		Free Cash Flow
-155.62M	-234.67M	-475.11M	-495.43M	-186.04M
	Operating Cash Flow
-114.43M	-165.63M	-268.95M	-213.83M	-44.31M
	Investing Cash Flow
-9.25M	-26.70M	34.79M	-544.33M	-141.37M
	Financing Cash Flow
-27.29M	355.00M	35.92M	955.80M	273.91M

Oatly Group Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price9.30

Price Trends

50DMA

9.11

Positive

100DMA

11.05

Negative

200DMA

14.23

Negative

Market Momentum

MACD

-0.15

Negative

RSI

52.13

Neutral

STOCH

80.23

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OTLY, the sentiment is Neutral. The current price of 9.3 is above the 20-day moving average (MA) of 9.13, above the 50-day MA of 9.11, and below the 200-day MA of 14.23, indicating a neutral trend. The MACD of -0.15 indicates Negative momentum. The RSI at 52.13 is Neutral, neither overbought nor oversold. The STOCH value of 80.23 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for OTLY.

Oatly Group Risk Analysis

Oatly Group disclosed 75 risk factors in its most recent earnings report. Oatly 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

Oatly Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AKO.A	79 Outperform	$3.50B	12.31	24.99%	4.46%	10.23%	19.07%
FIZZ	74 Outperform	$4.07B	21.94	40.81%	―	0.34%	9.48%
COCO	70 Outperform	$1.76B	32.59	24.26%	―	4.54%	19.37%
Sector *	64 Neutral	$9.21B	14.61	4.29%	186.43%	3.98%	5.57%
ZVIA	58 Neutral	$166.13M	―	-25.77%	―	-6.83%	19.09%
OTLY	46 Neutral	$278.03M	―	-91.64%	―	4.71%	52.27%
BRFH	41 Neutral	$37.43M	―	-183.38%	―	31.88%	9.47%

* Consumer Defensive Sector Average

Performance Comparison

OTLY

Oatly Group

9.30

-10.70

-53.50%

AKO.A

Embotelladora Andina SA

18.60

6.09

48.68%

FIZZ

National Beverage

43.52

2.72

6.67%

BRFH

Barfresh Food Group

2.76

1.19

75.80%

ZVIA

Zevia PBC

2.26

1.29

132.99%

COCO

Vita Coco Company

30.82

5.73

22.84%

Oatly Group Earnings Call Summary

Earnings Call Date: Feb 12, 2025 | % Change Since: -20.44% | Next Earnings Date: Apr 30, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a company that is making significant strides in improving profitability and operational efficiency, with strong volume growth and gross margin expansion. However, challenges remain in terms of meeting revenue growth expectations and addressing category sluggishness, particularly in the U.S. and China.

Highlights

Volume Growth and Profitability

Oatly reported a robust volume growth of 8.8% in 2024 compared to 2023. Despite falling short of topline guidance, adjusted EBITDA was at the favorable end of the guidance range, highlighting improved profitability.

Gross Margin Expansion

Gross margin expanded by 18 percentage points compared to the previous year, driven by supply chain improvements and better cost management.

Expansion in Food Service

North America reported double-digit revenue growth in retail, and food service sales grew by 22% excluding the largest customer, indicating aggressive diversification.

Free Cash Flow Improvement

Oatly reported a significant improvement in free cash flow, with a $319 million improvement since 2022, marking the best performance since the IPO.

Efficiency and Cost Reduction

The company reduced its employee count by 500 over two years and achieved a 19% reduction in cost per liter, reflecting strong efficiency drives.

Lowlights

Revenue Growth Below Guidance

2024 topline results came in below guidance at 4.8% constant currency revenue growth, affected by sluggish category growth.

Impact of Sourcing Changes

Revenue growth for 2025 is expected to be impacted by approximately 300 basis points due to a sourcing decision by the largest U.S. customer.

Challenges in China

The construction of the second Chinese facility was discontinued, reflecting challenges in expanding production capabilities in the region.

Category Sluggishness

Oatly noted sluggish growth in the oatmilk category, with challenges in igniting category momentum and converting traditional dairy consumers.

Company Guidance

During Oatly's fourth-quarter 2024 earnings call, the company reported several key metrics and guidance for 2025. Despite achieving an 8.8% volume growth over 2023, Oatly's constant currency revenue growth was 4.8%, falling short of guidance. However, the company delivered adjusted EBITDA at the favorable end of its guidance range. For 2025, Oatly expects constant currency revenue growth between 2% to 4%, with a 300-basis-point impact from changes in sourcing decisions at its largest U.S. customer, potentially adjusting the guidance range to 5% to 7%. The company forecasts adjusted EBITDA of $5 million to $15 million and capital expenditures between $30 million to $35 million. Oatly aims to drive profitable growth by leveraging its brand, enhancing efficiencies, and maintaining a leaner overhead structure with approximately 1,500 employees. The company reported a 14% revenue increase versus 2022, with a gross margin expansion of 18 percentage points and an adjusted EBITDA improvement exceeding $230 million, indicating substantial progress over the past two years.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.