MAMA's Growth Hurdles: Margin Pressures and Structural Risks Cloud Outlook

Investors bullish on Mama’s Creations (NASDAQ: MAMA) for its 19.4% revenue surge in fiscal 2025 may be overlooking a stark reality: the company’s profitability is in freefall, and its path to recovery hinges on overcoming costly operational and market risks.

While MAMA has expanded its footprint with wins at Walmart, Costco, and Amazon Fresh, its financials reveal a troubling imbalance. Despite $123.3 million in revenue last fiscal year—up nearly $20 million from 2024—net income collapsed by 43% to $3.7 million. Earnings per share (EPS) fell to $0.09, a 47% drop, while Adjusted EBITDA plunged 20.9%. The culprit? A perfect storm of rising commodity costs, self-inflicted operational disruptions, and a pricing strategy that’s failing to offset margin erosion.

The Margin Crisis

MAMA’s gross margin has been decimated. In fiscal 2024, it stood at 29.4% of revenue; by 2025, it had shrunk to 24.8%. The company blamed this on “rising commodity costs and construction-related disruptions” at its Farmingdale facility—a problem it claims was resolved by September 2024. Yet even in the most recent quarter (Q4 2025), gross margin inched up to just 27%, still below pre-disruption levels.

The math is stark: for every dollar of revenue, MAMA now keeps 5 cents less in gross profit than two years ago. With beef and chicken prices volatile, and only half of 2026 protein costs locked in via fixed-price contracts, this margin pressure isn’t going away.

The Debt and Capital Trap

MAMA’s cash reserves have been steadily drained. Cash fell from $11 million to $7.2 million over the past year, with $5.1 million spent on capital expenditures (CapEx) to upgrade operations. While reducing debt from $8.7 million to $5.1 million is positive, the heavy CapEx load raises questions: Is the company over-investing to fix structural issues, or gambling on a turnaround that may not materialize?

The leadership team’s optimism is notable. CEO Michael Weisberg cited a “return to high-margin growth” in 2026, pointing to stabilized operations and fixed-price protein contracts. But the plan relies on flawless execution of new processes like in-house chicken trimming—a complex shift that could backfire if labor costs or quality control issues arise.

The Risk of Customer Dependency

MAMA’s revenue growth is concentrated in a handful of big-box retailers. Its expansion into Walmart, Albertsons, and Costco is a double-edged sword. While these partnerships drive top-line growth, they also create dangerous dependency. If one of these partners faces financial trouble or shifts sourcing strategies—as retailers like Target have done in recent years—MAMA could see sudden revenue shocks.

The Bottom Line: Risks Outweigh the Rally

MAMA’s stock has risen nearly 30% year-to-date on optimism around its revenue growth and operational fixes. But investors should look past the headline numbers. Key red flags:

• Margin vulnerability: Commodity costs could keep squeezing profits even if CapEx investments pay off.
• Execution risk: Operational overhauls (e.g., in-house trimming) are unproven and could lead to further disruptions.
• Valuation stretch: At a current price-to-sales ratio of ~1.8x (vs. 1.2x in 2023), the stock may already be pricing in a turnaround that hasn’t materialized.

The company’s adjusted EBITDA has fallen for two straight years, and net income has been cut in half. Until MAMA can stabilize its margins and demonstrate consistent EBITDA growth—not just revenue—its “high-risk” warning remains justified.

Conclusion: MAMA is a cautionary tale of growth without profitability. While its strategic moves into new retailers and CapEx investments aim to build a “one-stop deli platform,” the execution hurdles and margin pressures are too large to ignore. Investors should proceed with extreme caution unless they can tolerate a high probability of volatility—or worse, a further decline in profitability. The stock’s recent rally may be a false dawn.