Sadot's Strategic Pivot Looks Like It's Paying Off As Analysts Forecast 360% Year-Over-Year Jump In Annual Revenue For 2023

This month, Zacks Small-Cap Research published a report on Sadot Group Inc SDOT, maintaining that it believes the emerging agri-food supply chain solutions company is worth $4 per share. The news comes ahead of Sadot’s third-quarter earnings release – expected on November 9 – and cites new acquisitions, restructuring initiatives and other recent achievements in its valuation. Zacks analysts forecast $746.5 million in revenue for 2023, which would represent more than 3.5x growth over Sadot’s $161.7 million in annual revenue reported in 2022. 

High Hopes For Sadot After The Company Reported Its First Profitable Quarter In Q2

In Q2 this year, Sadot reported its first profitable quarter with consolidated revenues increasing from $2.9 million to over $160 million year-over-year. The milestone achievement was driven by the company’s recent move into the agri-food supply chain sector earlier this year. 

By the end of August, Sadot’s revenue for 2023 totaled $488 million, and Zacks analysts expected the company to exceed $746 million by the end of the year. 

That’s due, in part, to Sadot’s recent acquisition of over 4,900 acres of farmland in Zambia, including over 1,300 acres of corn, 775 acres of soybean, 270 acres of wheat, 180 acres of Hass avocado and 50 acres of Tommy Atkins mangoes. By September, the farm had generated over $500,000 in revenue from the wheat harvest alone. 

Sadot planted an additional 1,300 acres of corn and 775 acres of soybeans in October, with plans to plant the remaining farmland to generate additional revenue from the acquisition.

The company is also in talks to develop a pilot program in collaboration with local farmers in the area, providing the seeds, fertilizer and other resources needed to make their own farmland more productive. The investment will not only support the local economy and improve the livelihoods of the approximately 1,200 farmers participating in the program but also create a potential future revenue stream for Sadot by providing warehousing and distribution services for the products they grow. 

Sadot is also continuing the restructuring of its restaurant segment as it pivots further into the agricultural and logistics side of the food commodities market. But it’s not completely cutting the segment. Instead, the company says it’s closing underperforming locations, re-franchising company-owned restaurants and adding new franchise royalty revenue by expanding its successful Pokemoto concept. 

The restructuring initiative is expected to reduce Sadot’s restaurant operating expenses and increase its franchise revenues. There are currently 35 Pokemoto units open (24 franchises and 11 company-owned) with a pipeline of more than 45 new locations already sold but not yet opened. 

At the end of September, Sadot announced a Standby Equity Purchase Agreement (SEPA) with Yorkville Advisors Global. The SEPA grants Sadot, at the company's discretion, the option to sell up to $25 million of common stock to Yorkville, starting with a $4 million advance in exchange for convertible promissory notes that can be converted into shares of common stock or paid back in cash within one year. 

Featured photo by Gozha Net on Unsplash.

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