Tootsie Roll Industries market cap is currently 2.1 billion dollars.
Share price writing this is $31.65 a share.
Are they a good investment?
Breaking numbers down.
Revenue for 2020-471 million
Profit-59 million
Revenue for 2010-521 million
Profit-53 million
Factoring in inflation, revenue should be 618 million and profit 63 million.
Revenue wise factoring in inflation, they are down 147 million in revenue and 10 million in profits.
In some defense of this, the revenue was for 2019, 527 million, which the loss seems somewhat related to COVID, with 2020 doing worse for the second half of the year, likely in a decline for Halloween and summer sales.
That said though, they are still below inflation and have pretty much held the same for the last decade.
But could they fix it?
Looked at the products and was kind of amazed by how much they actually sell.
Tootsie Rolls
Tootsie Pops
Charms Blow Pops
Junior Mints
Sugar Daddy’s
Dubble Bubble Gum
Charleston Chew
A bunch of products basically sold in every 7/11 in the US, but revenue is still pretty mediocre and don’t really see any big rebrand changing any product here.
After that, wanted to just compare revenue/market cap to another candy company to see if overvalued or undervalued.
Hershey made 8.1 billion in 2020, which was up 200-300 million, versus 2019.
Up 2.5 billion from 2010.
Profit was 1.2-1.3 billion.
Up from 510 million a decade prior.
Hershey’s market cap is currently 36.1 billion.
Market cap of 4.5x revenue.
Which amazing thing, that’s exactly what Tootsie Roll Industries trades at being 4.5x revenue also.
So is this a good investment?
No
They are visibly on the decline revenue wise, don’t have anything interesting in the works and I’d argue actually overvalued. Hershey’s had massive growth as a candy/food company in the 2010s, but Tootsie Roll Industries lost revenue and profit both before and after inflation, while still holding the same valuation to revenue.
Why did I write this?
Honest reason, I saw a tootsie roll last night, looked at the wrapper and thought reading “Tootsie Roll Industries” was funny, because I didn’t know they existed and just guessed they were owned by Hershey, Nestle or Mars.
Longer term thoughts though, I kind of weirdly think some company that’s good with branding online should try to raise funds to partner with them, take a large stake and rebrand the product category to get growth happening again. Weirdly enough, Junior Mints being probably the most underrated and easy to market on social media candy they have.
Besides that, Happy Halloween.