BBB Foods, Inc. Class A (TBBB) AI Stock Analysis

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BBB Foods, Inc. Class A

(NYSE:TBBB)

Rating:72Outperform

Price Target:

$33.00

▲( 8.73% Upside)

BBB Foods, Inc. Class A demonstrates strong financial and operational growth, highlighted by a significant increase in revenue and the transition to profitability. The technical indicators support a positive outlook, although valuation concerns exist due to a high P/E ratio. The earnings call reinforced a strong strategic focus on growth, despite short-term margin pressures. Overall, the stock presents a promising growth opportunity but is tempered by its current valuation metrics.

Positive Factors

Financial performance

TBBB swung to a profit from a prior-year loss, showcasing improved financial performance.

Growth potential

Store openings are outpacing the plan, indicating strong growth potential for TBBB.

Negative Factors

Non-recurring expenses

TBBB incurred significant non-recurring expenses, largely related to its IPO and compliance requirements.

Stock offering impact

Shares are expected to trade off on news of the offering and some expense related concerns.

BBB Foods, Inc. Class A (TBBB) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$4.23B

Dividend YieldN/A

Average Volume (3M)676.91K

Price to Earnings (P/E)―

Beta (1Y)1.29

Revenue GrowthN/A

EPS GrowthN/A

CountryUS

Employees25,300

SectorGeneral

Sector StrengthN/A

IndustryDiscount Stores

Share Statistics

EPS (TTM)N/A

Shares Outstanding62,048,107

10 Day Avg. Volume707,862

30 Day Avg. Volume676,912

Financial Highlights & Ratios

PEG Ratio2.63

Price to Book (P/B)15.08

Price to Sales (P/S)0.00

P/FCF Ratio46.94

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$37.67

Price Target Upside24.12% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering3

BBB Foods, Inc. Class A Business Overview & Revenue Model

Company DescriptionBBB Foods Inc., through its subsidiaries, operates grocery retail stores in Mexico. It offers food products, drinks, hygiene and beauty products, home clean products, coffee, tea and substitutes, jellies and desserts, and baby and pet products. The company also provides branded, private label, and spot products. In addition, it offers its products through online. The company serves low-to-middle income households. The company was incorporated in 2004 and is headquartered in Mexico City, Mexico.

How the Company Makes MoneyBBB Foods, Inc. generates revenue primarily through the sale of its diverse portfolio of food and beverage products. The company operates through various channels, including direct sales to retailers, partnerships with foodservice providers, and supply agreements with industrial clients. A significant portion of its earnings comes from strategic partnerships and licensing deals with other food and beverage brands, enhancing its market reach and product offerings. Additionally, BBB Foods invests in marketing and distribution networks to maximize its market penetration and brand recognition, further bolstering its revenue streams.

BBB Foods, Inc. Class A Financial Statement Overview

Summary

BBB Foods, Inc. Class A shows strong revenue and profit growth, with a significant improvement in stockholders' equity. However, leverage remains a concern with a debt-to-equity ratio of 2.28. Cash flows are robust, supporting operational cash generation, but careful cash management is needed to maintain this trajectory.

Income Statement

Very Positive

BBB Foods, Inc. Class A has shown strong revenue growth, with a 30.26% increase from 2023 to 2024. The company has successfully transitioned from a net loss in 2023 to a net profit in 2024, resulting in an improved net profit margin of 0.58%. Gross profit margins have held steady, indicating effective cost management. However, EBIT and EBITDA margins, while improved, remain modest at 2.31% and 6.07% respectively, suggesting room for operational efficiency improvements.

Balance Sheet

Positive

The balance sheet reflects a significant improvement in stockholders' equity, shifting from negative in 2023 to positive in 2024. The debt-to-equity ratio stands at 2.28, indicating a moderate leverage level but improved equity position. The equity ratio has improved to 17.71%, though it remains below ideal levels, indicating a reliance on liabilities. Continued focus on reducing debt and improving equity is recommended.

Cash Flow

Positive

Cash flows have been robust with a strong operating cash flow to net income ratio of 11.21, reflecting efficient cash generation from operations. Free cash flow remains strong, although it showed a slight decrease from 2023. The improvement from negative net income to positive supports the cash flow strength, but cautious cash management is advised to maintain this trajectory.

Dec 2024	Dec 2023	Dec 2022	Dec 2021
Breakdown
Income Statement		Total Revenue
57.44B	44.08B	32.58B	23.09B
	Gross Profit
9.38B	7.04B	4.92B	3.44B
	EBIT
1.33B	793.86M	520.27M	394.05M
	EBITDA
3.49B	2.43B	820.41M	608.85M
	Net Income Common Stockholders
334.42M	-306.15M	-565.11M	-816.67M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.47B	1.22B	984.63M	1.00B
	Total Assets
22.78B	14.96B	11.79B	8.05B
	Total Debt
9.20B	11.91B	10.55B	8.13B
	Net Debt
7.79B	10.71B	9.57B	7.13B
	Total Liabilities
18.74B	19.60B	16.51B	12.50B
	Stockholders Equity
4.03B	-4.63B	-4.71B	-4.45B
Cash Flow		Free Cash Flow
1.31B	1.34B	990.65M	832.27M
	Operating Cash Flow
3.75B	3.14B	2.12B	1.37B
	Investing Cash Flow
-4.91B	-1.78B	-1.11B	-524.08M
	Financing Cash Flow
1.29B	-1.10B	-1.03B	-450.24M

BBB Foods, Inc. Class A Technical Analysis

Technical Analysis Sentiment

Positive

Last Price30.35

Price Trends

50DMA

27.85

Positive

100DMA

28.15

Positive

200DMA

29.41

Positive

Market Momentum

MACD

0.63

Positive

RSI

53.23

Neutral

STOCH

79.25

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TBBB, the sentiment is Positive. The current price of 30.35 is above the 20-day moving average (MA) of 30.01, above the 50-day MA of 27.85, and above the 200-day MA of 29.41, indicating a neutral trend. The MACD of 0.63 indicates Positive momentum. The RSI at 53.23 is Neutral, neither overbought nor oversold. The STOCH value of 79.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TBBB.

BBB Foods, Inc. Class A Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BJ	80 Outperform	$15.72B	29.37	32.76%	―	2.84%	11.25%
PSMT	79 Outperform	$3.30B	22.89	12.42%	1.16%	8.65%	17.76%
OLLI	79 Outperform	$7.02B	35.35	12.47%	―	8.04%	10.75%
TBBB	72 Outperform	$4.23B	―	14.10%	―	―	―
DG	66 Neutral	$22.48B	19.98	15.89%	2.34%	4.96%	-32.41%
DLTR	61 Neutral	$19.04B	―	18.88%	―	-9.88%	-205.57%
Sector *	57 Neutral	$4.81B	19.87	-17.81%	5.21%	13.60%	-27.95%

* General Sector Average

Performance Comparison

TBBB

BBB Foods, Inc. Class A

29.79

1.76

6.28%

Dollar General

100.64

-35.81

-26.24%

DLTR

Dollar Tree

89.97

-24.63

-21.49%

PSMT

Pricesmart

104.21

22.18

27.04%

OLLI

Ollie's Bargain Outlet Holding

114.30

39.12

52.04%

Bj's Wholesale Club Holdings

115.97

32.77

39.39%

BBB Foods, Inc. Class A Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: -2.03%|

Next Earnings Date:Aug 20, 2025

Earnings Call Sentiment Neutral

The earnings call presents a strong growth narrative with significant store openings and revenue increases. However, these achievements are counterbalanced by rising administrative expenses and a decrease in EBITDA margin due to accelerated investments. The sentiment reflects a strategic focus on long-term growth despite short-term financial pressures.

Q1-2025 Updates

Positive Updates

Record Store Openings and Growth

Opened 117 net new stores this quarter, bringing the total to 2,889 stores. Compared to the first quarter of 2024, which had 94 openings, this marks a significant increase and a total of 507 stores over the last 12 months.

Strong Revenue and Same Store Sales Growth

Total revenues increased by 35% to MXN17 billion, with same store sales growing by 13.5%. This positions Tiendas Tres B as one of the fastest-growing retailers globally.

Improved Cash Flow and Financial Position

Cash flow generated by operating activities reached MXN1.1 billion, a 49% increase year-over-year. The company ended with a net cash position of approximately MXN1.6 billion, plus $150 million of cash.

EBITDA Growth

EBITDA increased by over 12% to reach MXN705 million, despite margin pressures due to increased investments.

Negative Updates

Increased Admin Expenses

Admin expenses as a percentage of revenue increased by 60 basis points from 3.5% to 4.1%, partly due to MXN84 million in noncash share-based payments and investments in growth.

EBITDA Margin Decrease

EBITDA margin decreased from 4.9% to 4.1% due to increased investments to support growth.

Impact of Accelerated Store Openings on Expenses

Sales expenses as a percentage of revenue slightly increased from 10.2% to 10.3% due to the fast pace of store openings, which incurs costs before revenues fully materialize.

Company Guidance

In the first quarter of fiscal year 2025, Tiendas Tres B demonstrated significant growth and operational success despite challenging market conditions. The company opened 117 net new stores, increasing its total to 2,889, and reported a 13.5% growth in same-store sales. Total revenues increased by 35.1% year-over-year, reaching MXN17.1 billion, while EBITDA rose by 12.7% to MXN705 million. The company generated MXN1.1 billion in cash flow from operating activities, marking a 49% increase from the previous year, and ended the quarter with a net cash position of approximately MXN1.6 billion. Administrative expenses rose by 60 basis points to 4.1% of revenue, partly due to increased investments in talent and new regional expansions. Despite these expenses, the company maintained a robust business model with significant negative working capital, contributing to strong cash flow generation. The strategic focus remains on accelerating growth and expanding market share, supported by investments in technology and distribution infrastructure.

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.