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Why SunOpta's Shares Dropped 18.1% on Wednesday

By Travis Hoium – Aug 11, 2021 at 5:00PM

Key Points

  • Growth of 9.7% topped estimates, but losses were bigger than expected.

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Earnings weren't as strong as investors were hoping for, but there are some silver linings.

What happened 

Shares of plant-based food company SunOpta Inc. (STKL 2.76%) fell as much as 18.1% in trading on Wednesday after reporting second-quarter 2021 financial results. Shares closed trading down 6.3% for the day. 

So what

Revenue increased 9.7% to $202.3 million in the quarter, driven by a 21.4% increase in plant-based products and offset by fruit-based sales falling 1.9%. The loss from continuing operations was $0.9 million, improving on a loss of $5.1 million a year ago, and net loss was $1.7 million, or $0.02 per share.

A field with growing plants.

Image source: Getty Images.

Analysts were expecting revenue of $198.9 million and a loss of $0.01 per share, so results were mixed, compared to Wall Street estimates. But that's to be expected in a growing company, and the miss wasn't too bad overall. 

Now what

Taking a step back, SunOpta's revenue is growing, and gross margins are up (13% vs 12.6% a year ago) in a tough commodity environment. Companies producing goods have struggled with higher costs that they can't pass on to customers, but SunOpta is navigating that environment well.

Given the trends in the business, I think today's sell-off is overdone. This is definitely an agriculture stock that I'm adding to my watchlist. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends SUNOPTA, INC. The Motley Fool has a disclosure policy.

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Stocks Mentioned

SunOpta Inc. Stock Quote
SunOpta Inc.
STKL
$10.04 (2.76%) $0.27

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