Food and beverage supplier MGP Ingredients (NASDAQ: MGPI) announced better-than-expected revenue in Q4 CY2025, but sales fell by 23.5% year on year to $138.3 million. On the other hand, the company’s full-year revenue guidance of $490 million at the midpoint came in 4.1% below analysts’ estimates. Its non-GAAP profit of $0.63 per share was 26% above analysts’ consensus estimates.

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Company Overview

Headquartered in Atchison, Kansas, MGP Ingredients (NASDAQ: MGPI) is a leading supplier of high-quality ingredients to the food and beverage industry

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $536.4 million in revenue over the past 12 months, MGP Ingredients is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers.

As you can see below, MGP Ingredients struggled to generate demand over the last three years. Its sales dropped by 11.8% annually, a tough starting point for our analysis.

This quarter, MGP Ingredients’s revenue fell by 23.5% year on year to $138.3 million but beat Wall Street’s estimates by 3.1%.

Looking ahead, sell-side analysts expect revenue to decline by 4.4% over the next 12 months. it’s hard to get excited about a company that is struggling with demand.

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Cash Is King

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

MGP Ingredients has shown impressive cash profitability, driven by its attractive business model that gives it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 8.6% over the last two years, better than the broader consumer staples sector. The divergence from its underwhelming operating margin stems from the add-back of non-cash charges like depreciation and stock-based compensation. GAAP operating profit expenses these line items, but free cash flow does not.

Taking a step back, we can see that MGP Ingredients’s margin expanded by 9.8 percentage points over the last year. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability fell.

MGP Ingredients’s free cash flow clocked in at $24.27 million in Q4, equivalent to a 17.5% margin. This result was good as its margin was 11.8 percentage points higher than in the same quarter last year, building on its favorable historical trend.

Key Takeaways from MGP Ingredients’s Q4 Results

We were impressed by how significantly MGP Ingredients blew past analysts’ EBITDA expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its full-year revenue guidance missed and its full-year EBITDA guidance fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 11.5% to $22.85 immediately after reporting.

Is MGP Ingredients an attractive investment opportunity at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).