SunOpta (STKL) Stock Trades Up, Here Is Why

SunOpta’s third quarter results showed strong revenue growth, but the market responded negatively as operational challenges weighed on profitability. Management attributed the 17% volume growth to broad-based demand in plant-based beverages, fruit snacks, and foodservice channels, with CEO Brian Kocher noting, “Our categories are roaring. Our customers are voting with their business, and they are voting for us.” However, Kocher also acknowledged that the rapid pace of growth strained the company’s production network, leading to higher maintenance and overtime costs, and delays in margin improvement initiatives.

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SunOpta (STKL) Q3 CY2025 Highlights:

• Revenue: $205.4 million vs analyst estimates of $195.3 million (16.6% year-on-year growth, 5.2% beat)
• Adjusted EPS: $0.05 vs analyst estimates of $0.03 ($0.02 beat)
• Adjusted EBITDA: $23.58 million vs analyst estimates of $23.7 million (11.5% margin, 0.5% miss)
• The company lifted its revenue guidance for the full year to $872.5 million at the midpoint from $810 million, a 7.7% increase
• EBITDA guidance for the full year is $105 million at the midpoint, above analyst estimates of $101.2 million
• Operating Margin: 3.3%, up from 0.5% in the same quarter last year
• Market Capitalization: $494.1 million

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From SunOpta’s Q3 Earnings Call

• James Salera (Stephens Inc.) asked about the sequencing of gross margin recovery and whether Q4 margin pressures would be temporary or persist into next year. CEO Brian Kocher explained the cost headwinds are “time-bound” and expects margin improvement to resume in the second half of 2026.
• James Salera (Stephens Inc.) followed up on why multiple customers accelerated their volume commitments. Kocher attributed this to SunOpta’s ability to quickly scale production and its value proposition, noting, “This volume is with marquee customers in great channels.”
• Andrew Strelzik (BMO Capital Markets) questioned why not all new demand would flow through to future top-line growth. Kocher clarified that capacity limitations will constrain near-term growth until new equipment and lines are installed.
• Jon Andersen (William Blair) raised concerns about the ability to price for overload volume and maintain margins. Kocher acknowledged pricing actions have been taken where possible but highlighted supply chain constraints and customer relationships as critical to long-term value.
• Daniel Biolsi (Hedgeye) asked about the duration and magnitude of Q4 headwinds. CFO Greg Gaba said impacts are not recurring quarterly and are expected to ease as operational fixes are implemented, with full recovery by mid-2026.

Catalysts in Upcoming Quarters

Looking ahead, our analysts will be watching (1) the pace and effectiveness of operational recovery measures, particularly at the Midlothian facility; (2) the on-time installation and ramp-up of the new aseptic processing line and wastewater management systems; and (3) continued volume growth in key categories such as plant-based beverages and fruit snacks. Successful execution in these areas will be crucial for SunOpta to deliver on its margin and growth targets.

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What Happened?

Shares of plant-based food and beverage company SunOpta fell 20% in the morning session after the company reported underwhelming earnings. The company posted revenue of $205.4 million, a 16.6% increase from the prior year, and even raised its sales forecast for the full year. However, investors focused on a significant decline in profitability. SunOpta’s gross profit margin, a key measure of how much profit it makes on each sale, fell to 12.4% from 17% in the same quarter last year. This 4.6 percentage point drop overshadowed the strong sales figures, signaling to investors that higher costs for materials and production were eating into the company's earnings and raising concerns about the quality of its growth.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy SunOpta? Access our full analysis report here.

What Is The Market Telling Us

SunOpta’s shares are quite volatile and have had 17 moves greater than 5% over the last year. But moves this big are rare even for SunOpta and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 6 months ago when the stock gained 26.8% on the news that the company reported strong first quarter 2025 results which significantly beat analysts' revenue, EPS, and EBITDA expectations, and included a raise to full-year revenue guidance. Revenue rose 10% as more people bought its drinks, snacks, and broth, even though the company cut prices a bit and left one category behind. Overall, we think this was a solid quarter with some key metrics above expectations.

SunOpta is down 49.1% since the beginning of the year, and at $3.94 per share, it is trading 50.1% below its 52-week high of $7.89 from December 2024. Investors who bought $1,000 worth of SunOpta’s shares 5 years ago would now be looking at an investment worth $546.46.

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