Download PDF

1. Company Snapshot

1.a. Company Description

Farmer Bros.Co. engages in the roasting, wholesale, equipment servicing, and distribution of coffee, tea, and culinary products in the United States.The company offers roast and ground coffee; frozen liquid coffee; flavoured and unflavoured iced and hot teas; culinary products, including spices, pancake and biscuit mixes, gravy and sauce mixes, soup bases, dressings, and syrups and sauces, as well as coffee filters, cups, sugar, and creamers; and other beverages comprising cappuccino, cocoa, granitas, and other blender-based beverages and concentrated and ready-to-drink cold brew and iced coffee.


It serves small independent restaurants, foodservice operators, and large institutional buyers, as well as consumers.The company distributes its products through direct-store-delivery network, and common carriers or third-party distributors, as well as Website.The company was founded in 1912 and is headquartered in Northlake, Texas.

Show Full description

1.b. Last Insights on FARM

Farmer Bros. Co.'s strong Q2 earnings beat estimates, driven by a net sales increase, improved margins, and ongoing efforts to drive growth and efficiency. The company's gross margin expansion is a positive sign, indicating its ability to maintain profitability. Additionally, the company's turnaround efforts appear to be gaining traction, with a deeply discounted valuation making it an attractive opportunity.

1.c. Company Highlights

2. Farmer Brothers' Q4 2025 Earnings Analysis: Navigating Challenges and Opportunities

Farmer Brothers reported net sales of $342.3 million for fiscal 2025, a slight increase from the previous year. The company's adjusted EBITDA for the year was $14.8 million, up $14 million year-over-year, with gross margins reaching 43.5%. The earnings per share (EPS) came in at -$0.55, beating estimates of -$0.74. The company's free cash flow surged to $6.5 million, with $32.6 million in borrowing capacity remaining.

Publication Date: Sep -13

📋 Highlights
  • 2025 EBITDA Growth: Adjusted EBITDA rose $14M YoY to $14.8M, with Q4 at $5.8M, driven by pricing actions and margin expansion.
  • Gross Margin Expansion: Annual gross margins hit 43.5% (up 420 bps), peaking at 44.9% in Q4 on operational efficiency and cost controls.
  • Free Cash Flow Surge: Free cash flow surged $34.5M YoY to $6.5M annually, with $32.6M in remaining borrowing capacity post-debt reduction.
  • 2026 Margin Headwinds: Green coffee price volatility and tariffs expected to pressure gross margins to the high 30s in 2026.
  • Brand & Operational Shifts: Launched Sum>One to consolidate brand portfolio and rationalized SKUs, enhancing service with Revive network and CRM upgrades.

Operational Highlights and Challenges

The company made significant progress in fiscal 2025, launching the Sum>One brand and rationalizing its SKU portfolio to strengthen brand positioning. Enhanced sourcing, roasting, and manufacturing capabilities improved resilience amid volatile green coffee markets. However, the company faced challenges, including a 10% decline in coffee volumes due to weak consumer demand and rising green coffee prices. Tariff risks and margin pressures are expected to continue into 2026, potentially reducing gross margins to the high 30s.

Valuation and Future Outlook

With a P/E Ratio of -2.72 and an EV/EBITDA of 18.97, the market appears to be pricing in significant challenges for the company. However, the Free Cash Flow Yield of 16.49% suggests potential value for investors. As John Moore stated, the company's focus remains on top-line growth, customer retention, and leveraging core capabilities like DSD networks and white-label opportunities. The company's efforts to improve operational efficiency and expand its allied products portfolio are expected to drive growth amid industry challenges.

Key Takeaways and Investment Considerations

The company's progress in fiscal 2025 demonstrates resilience in a challenging market. While macroeconomic headwinds and coffee-specific challenges persist, Farmer Brothers' strategic initiatives and operational improvements position it for potential growth. Investors should consider the company's valuation metrics, including its P/S Ratio of 0.12 and ROE of -35.57%, when evaluating the stock's potential.

3. NewsRoom

Card image cap

WHERE TO BUY FRESH CHRISTMAS TREES IN DALLAS-FORT WORTH: CALLOWAY'S NURSERY OFFERS 21 LOCATIONS WITH FARM-SOURCED TREES

Nov -18

Source: prnewswire.com

Card image cap

Farmer Bros. Co. (FARM) Q1 2026 Earnings Call Prepared Remarks Transcript

Nov -07

Source: seekingalpha.com

Card image cap

New Strong Sell Stocks for Nov. 7

Nov -07

Source: zacks.com

Card image cap

Farmer Brothers (FARM) Reports Q1 Loss, Misses Revenue Estimates

Nov -07

Source: zacks.com

Card image cap

Farmer Brothers Coffee to report fiscal first quarter 2026 financial results

Oct -23

Source: globenewswire.com

Card image cap

Farmer Brothers Coffee Reports Fourth Quarter and Full Year Fiscal 2025 Financial Results

Sep -11

Source: globenewswire.com

Card image cap

Farmer Brothers Coffee to report fiscal fourth quarter and full year fiscal 2025 financial results

Aug -28

Source: globenewswire.com

Card image cap

Farmer Brothers Coffee Announces Plan to Explore Strategic Alternatives

Jul -21

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.62%)

6. Segments

Coffee (Roasted)

Expected Growth: 4.65%

Farmer Bros. Co.'s 4.65% growth in roasted coffee is driven by increasing demand from restaurants and cafes, expansion into new markets, and a shift towards premium and specialty coffee blends. Additionally, the company's focus on sustainability and eco-friendly practices resonates with environmentally conscious consumers, contributing to its growth.

Tea & Other Beverages

Expected Growth: 4.5%

Farmer Bros. Co.'s 4.5% growth in Tea & Other Beverages is driven by increasing demand for specialty teas, expansion in the foodservice channel, and strategic acquisitions. Additionally, the company's focus on sustainability, organic, and fair-trade products resonates with environmentally conscious consumers, contributing to the segment's growth.

Culinary

Expected Growth: 4.65%

Farmer Bros. Co.'s Culinary segment growth of 4.65% is driven by increasing demand for premium coffee and tea products, expansion into new channels such as e-commerce and convenience stores, and strategic partnerships with foodservice providers. Additionally, the company's focus on sustainability and eco-friendly packaging resonates with environmentally conscious consumers, contributing to the segment's growth.

Spices

Expected Growth: 4.83%

Farmer Bros. Co.'s spices segment growth of 4.83% is driven by increasing demand for premium and organic spices, expansion into new distribution channels, and strategic partnerships with foodservice providers. Additionally, the company's focus on product innovation, quality, and customer service has led to market share gains and pricing power.

Delivery Surcharge

Expected Growth: 4.65%

The 4.65% growth in Delivery Surcharge from Farmer Bros. Co. is driven by increasing demand for convenient and contactless delivery options, rising labor costs, and higher fuel prices. Additionally, the company's strategic pricing initiatives and expansion into new markets have contributed to the surge in delivery surcharges.

7. Detailed Products

Coffee

Farmer Bros. Co. offers a wide range of coffee products, including whole beans, ground coffee, and single-serve cups, made from high-quality Arabica and Robusta beans.

Tea

Farmer Bros. Co. provides a variety of tea products, including black, green, and herbal teas, in tea bags, loose-leaf, and iced tea formats.

Bakery and Pastry

Farmer Bros. Co. offers a range of bakery and pastry products, including muffins, cookies, and bread, perfect for breakfast, snacks, or desserts.

Spices and Seasonings

Farmer Bros. Co. provides a variety of spices and seasonings, including salt, pepper, and blends, to enhance the flavor of food and beverages.

Syrups and Creamers

Farmer Bros. Co. offers a range of syrups and creamers, including flavored syrups, sweetener syrups, and non-dairy creamers, for coffee, tea, and other beverages.

Equipment and Supplies

Farmer Bros. Co. provides a range of equipment and supplies, including coffee brewers, tea brewers, and accessories, for the foodservice industry.

8. Farmer Bros. Co.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Farmer Bros. Co. faces moderate threat from substitutes, as customers can opt for alternative coffee brands or brewing methods, but the company's strong brand recognition and quality products mitigate this threat.

Bargaining Power Of Customers

Farmer Bros. Co. has a diverse customer base, which reduces the bargaining power of individual customers, and the company's strong relationships with its customers also limit their bargaining power.

Bargaining Power Of Suppliers

Farmer Bros. Co. relies on a few large suppliers for its coffee beans, which gives them some bargaining power, but the company's long-term contracts and strong relationships with suppliers mitigate this threat.

Threat Of New Entrants

The coffee industry has high barriers to entry, including significant capital requirements and the need for specialized equipment and expertise, which limits the threat of new entrants.

Intensity Of Rivalry

The coffee industry is highly competitive, with many established players and a high level of competition for market share, which increases the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 56.09%
Debt Cost 12.82%
Equity Weight 43.91%
Equity Cost 12.82%
WACC 12.82%
Leverage 127.73%

11. Quality Control: Farmer Bros. Co. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Farmer Bros

A-Score: 3.3/10

Value: 7.8

Growth: 4.1

Quality: 2.2

Yield: 0.0

Momentum: 4.0

Volatility: 1.7

1-Year Total Return ->

View Full Report
Stock-Card
BRC

A-Score: 3.2/10

Value: 7.0

Growth: 6.4

Quality: 3.8

Yield: 0.0

Momentum: 0.0

Volatility: 2.0

1-Year Total Return ->

View Full Report
Stock-Card
SunOpta

A-Score: 3.0/10

Value: 5.1

Growth: 3.1

Quality: 2.4

Yield: 0.0

Momentum: 4.0

Volatility: 3.3

1-Year Total Return ->

View Full Report
Stock-Card
TreeHouse Foods

A-Score: 3.0/10

Value: 6.6

Growth: 4.2

Quality: 2.6

Yield: 0.0

Momentum: 0.0

Volatility: 4.3

1-Year Total Return ->

View Full Report
Stock-Card
Beyond Meat

A-Score: 3.0/10

Value: 9.0

Growth: 3.0

Quality: 5.2

Yield: 0.0

Momentum: 0.5

Volatility: 0.0

1-Year Total Return ->

View Full Report
Stock-Card
Hain Celestial

A-Score: 2.5/10

Value: 9.8

Growth: 0.8

Quality: 2.8

Yield: 0.0

Momentum: 0.0

Volatility: 1.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.53$

Current Price

1.53$

Potential

-0.00%

Expected Cash-Flows