HFFG

HF Foods Group ($HFFG) Executives Buy $58,000 in Stock After Price Crash, Shares Surge 72%

03/20/2025 22:50

Key executives at HF Foods Group Inc. ($HFFG) have made significant insider purchases following last week's stock plunge, signaling that they believe the shares are undervalued after the company's financial results triggered a sharp decline. Between March 17 and March 19, Chief Commercial Officer Christine Chang, President Xi Lin, and Chief Financial Officer Cindy Yao collectively bought 22,461 shares worth approximately $57,845. Notably, President Xi Lin made consecutive purchases, first acquiring 5,000 shares ($12,345) on March 17, followed by an additional 7,500 shares ($20,047) the next day. HF Foods, a distributor that supplies Asian restaurants and foodservice clients across the United States, has been navigating challenging times. In its Q4 2024 earnings released on March 13, the company reported adjusted earnings of 11 cents per share, exceeding analyst expectations of 9 cents, and revenue of $305.28 million, surpassing the forecast of $287.86 million. However, the quarter also saw a substantial net loss of $43.89 million, which immediately impacted the stock price. On the day of the earnings announcement, $HFFG shares plummeted to $1.70, hitting a 52-week low and representing a decline of approximately 47% year-to-date. However, following the insider purchases, the stock rebounded to $2.93 by March 19, recovering nearly 72% from its recent bottom. Looking at the company's full-year 2024 performance, annual revenue increased by 4.6% to $1,201.7 million compared to the previous year, but a $46.3 million goodwill impairment charge resulted in an annual net loss of $48.1 million. Despite this, adjusted EBITDA rose by 21.6% to $42.0 million year-over-year. Currently, $HFFG's valuation metrics are notably low, with a price-to-book ratio of 0.48 and a price-to-sales ratio of just 0.08. These figures suggest that the stock is trading at a significant discount to the company's underlying asset value and revenue. The company is executing an operational transformation plan to capitalize on growth opportunities in the Asian foodservice sector and is expanding into high-growth channels like specialty grocery and e-commerce to diversify revenue streams. In February 2025, HF Foods secured a revolving credit agreement of up to $125 million. Meanwhile, in June 2024, the company announced a settlement with the Securities and Exchange Commission (SEC), agreeing to pay a $3.9 million civil penalty without admitting or denying the SEC's findings. Wall Street analysts have set an average 12-month price target of $6.00 for $HFFG, indicating potential upside of approximately 100% from current levels. This aligns with the recent bullish insider buying activity. Insider purchases typically send a strong signal that executives have confidence in the company's long-term prospects and believe the current share price is below intrinsic value. The cluster buying pattern – with the CCO, President, and CFO all purchasing shares simultaneously – makes this signal particularly compelling. In its recent earnings report, management acknowledged ongoing pressures across key customer segments but maintained that long-term industry fundamentals remain strong and that the company is strategically positioned to leverage opportunities. The recent insider buying activity appears to be a tangible demonstration of this confidence.

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