Download PDF

1. Company Snapshot

1.a. Company Description

S&W Seed Company, an agricultural company, engages in breeding, growing, processing, and selling alfalfa and sorghum seeds.It also offers sunflower, wheat germplasm, wheat, and pasture seeds.The company sells its seeds to distributors and dealers in 40 countries.


S&W Seed Company was founded in 1980 and is headquartered in Longmont, Colorado.

Show Full description

1.b. Last Insights on SANW

S&W Seed Company's recent performance was driven by strong preliminary Q1 2025 financial results, with revenue increasing 15% year-over-year to $44.4 million. The company's CEO, Mark Herrmann, attributed the growth to a strong alfalfa seed market and increased demand for its hybrid corn seed. Additionally, S&W Seed announced the commencement of a strategic alternatives review process to explore opportunities to enhance shareholder value. The company also filed its 10-Q for the three months ended September 30, 2024, which provided further insight into its financial performance.

1.c. Company Highlights

2. S&W Seed Company Delivers Mixed Q3 Results Amidst Market Headwinds

S&W Seed Company reported mixed financial results for its third quarter of fiscal year 2025, reflecting progress in operational efficiency but facing significant headwinds from tariffs and market disruptions. Q3 revenue came in at $9.5 million, with Americas sorghum revenue contributing $7.1 million. Gross margin improved to 37.7%, up from prior periods, driven by cost-saving measures. The company also achieved its first positive adjusted EBITDA in years, at $244,000, a notable turnaround from the negative $2.2 million reported in the same quarter last year. However, the adjusted EPS of -0.57 was better than analysts' estimates of -1.09, signaling some stabilization in profitability.

Publication Date: May -17

📋 Highlights
  • First Positive Adjusted EBITDA in Years: - Achieved positive adjusted EBITDA of $244,000 in Q3, up from -$2.2 million last year.
  • Revised FY25 Outlook: - Revised revenue outlook to $29-$31 million and adjusted EBITDA to -$8.5M to -$7M due to tariffs and drought.
  • Strategic Growth Initiatives: - Focused on high-margin Double Team sorghum solutions, targeting 10%-12% of the US grain sorghum market this year.
  • Impact of Tariffs and Drought: - Tariffs and drought reduced expected FY25 revenue by $5.5M-$7M and EBITDA by $3.5M-$4M.
  • New Product Success: - Launched Prussic Acid Free sorghum, which sold out, demonstrating strong market demand for innovative solutions.

Operational Efficiency and Cost Management

The company has made significant strides in reducing operating expenses, which fell to $4.3 million in Q3 compared to $5.5 million in the prior year. Management highlighted tight working capital management and progress in lowering inventory levels, with further reductions expected by year-end. Vanessa Baughman, CFO, noted that cash savings were partially offset by $1 million spent on the VA process in the first half of the fiscal year. Additionally, the company secured a $25 million working capital facility with Mountain Ridge, providing liquidity to navigate fluctuating working capital demands.

Market Challenges and Outlook

Despite operational improvements, S&W Seed faces near-term challenges, particularly from tariffs impacting the U.S. sorghum market. The company revised its FY25 revenue outlook to $29 million to $31 million, down from previous guidance, citing a $5.5 million to $7 million revenue impact and a $3.5 million to $4 million hit to adjusted EBITDA. Mark Herrmann, CEO, emphasized that while the post-tariff environment has disrupted the market, the company remains optimistic about long-term growth driven by sorghum's health benefits and differentiated solutions. S&W Seed is on track to capture 10% to 12% of the U.S. grain sorghum market this year, with ambitious targets of 25% to 30% over eight years.

Valuation Considerations

With a P/S ratio of 0.29 and an EV/EBITDA of -0.7, S&W Seed's valuation reflects the market's cautious stance on its near-term prospects. However, the company's focus on high-margin sorghum solutions and its progress in reducing costs suggest potential for long-term value creation. Analysts expect revenue growth of 41.2% next year, indicating confidence in the company's ability to navigate current challenges and capitalize on emerging opportunities in sustainable markets like SAF.

3. NewsRoom

Card image cap

S&W Announces Voluntary Delisting from Nasdaq and SEC Deregistration

Jul -14

Source: globenewswire.com

Card image cap

S&W Seed Company (SANW) Q3 2025 Earnings Call Transcript

May -15

Source: seekingalpha.com

Card image cap

S&W Announces Third Quarter Fiscal 2025 Financial Results

May -15

Source: prnewswire.com

Card image cap

S&W Seed Company to Report Third Quarter Fiscal Year 2025 Financial Results on Thursday, May 15, 2025

May -12

Source: prnewswire.com

Card image cap

S&W Seed Company (SANW) Q2 2025 Earnings Call Transcript

Feb -13

Source: seekingalpha.com

Card image cap

S&W Announces Second Quarter Fiscal 2025 Financial Results

Feb -13

Source: prnewswire.com

Card image cap

S&W Seed Company to Report Second Quarter Fiscal Year 2025 Financial Results on Thursday, February 13, 2025

Feb -06

Source: prnewswire.com

Card image cap

S&W Seed (NASDAQ:SANW) Stock Price Passes Above Two Hundred Day Moving Average – What’s Next?

Jan -28

Source: https://www.defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.05%)

6. Segments

Seed

Expected Growth: 10%

S&W Seed Company's 10% growth is driven by increasing demand for alfalfa seeds, expansion into new markets, and strategic acquisitions. The company's focus on research and development has led to the introduction of new, high-yielding seed varieties, further boosting sales. Additionally, growing awareness of sustainable agriculture practices and government initiatives supporting the use of cover crops have contributed to the company's growth momentum.

Services

Expected Growth: 14%

S&W Seed Company's 14% growth is driven by increasing demand for high-quality alfalfa seeds, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on research and development has led to the introduction of new, high-yielding seed varieties, further boosting sales. Strong relationships with distributors and farmers have also contributed to the company's growth.

7. Detailed Products

Alfalfa Seed

High-quality alfalfa seed for dairy and livestock farmers, providing high yields and nutritional value for their animals.

Grain Sorghum Seed

Drought-tolerant grain sorghum seed for farmers, offering high yields and resistance to diseases.

Sunflower Seed

High-yielding sunflower seed for farmers, providing a profitable crop for food and industrial applications.

Hybrid Wheat Seed

High-performance hybrid wheat seed for farmers, offering improved yields and disease resistance.

SteerCoat Seed Coatings

Innovative seed coatings for farmers, enhancing seed germination, growth, and yield.

8. S&W Seed Company's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for S&W Seed Company is moderate due to the availability of alternative products in the market.

Bargaining Power Of Customers

The bargaining power of customers is low for S&W Seed Company as the company has a strong brand presence and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate for S&W Seed Company as the company relies on a few key suppliers for its raw materials.

Threat Of New Entrants

The threat of new entrants is high for S&W Seed Company due to the relatively low barriers to entry in the seed industry.

Intensity Of Rivalry

The intensity of rivalry is high for S&W Seed Company due to the presence of several established players in the market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 43.63%
Debt Cost 8.66%
Equity Weight 56.37%
Equity Cost 8.66%
WACC 8.66%
Leverage 77.39%

11. Quality Control: S&W Seed Company 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
CHS

A-Score: 6.2/10

Value: 6.2

Growth: 3.7

Quality: 3.6

Yield: 10.0

Momentum: 3.5

Volatility: 10.0

1-Year Total Return ->

View Full Report
Stock-Card
Limoneira

A-Score: 4.9/10

Value: 8.4

Growth: 6.0

Quality: 4.9

Yield: 4.0

Momentum: 0.0

Volatility: 6.3

1-Year Total Return ->

View Full Report
Stock-Card
Vital Farms

A-Score: 4.9/10

Value: 4.5

Growth: 9.6

Quality: 6.6

Yield: 0.0

Momentum: 5.0

Volatility: 3.7

1-Year Total Return ->

View Full Report
Stock-Card
Alico

A-Score: 4.5/10

Value: 5.0

Growth: 0.9

Quality: 2.0

Yield: 3.0

Momentum: 8.0

Volatility: 8.0

1-Year Total Return ->

View Full Report
Stock-Card
Local Bounti

A-Score: 4.1/10

Value: 9.4

Growth: 4.2

Quality: 5.1

Yield: 0.0

Momentum: 5.5

Volatility: 0.3

1-Year Total Return ->

View Full Report
Stock-Card
S&W Seed

A-Score: 2.4/10

Value: 10.0

Growth: 2.0

Quality: 2.2

Yield: 0.0

Momentum: 0.0

Volatility: 0.0

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

0.08$

Current Price

0.08$

Potential

-0.00%

Expected Cash-Flows