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Village Farms Stock More Than Doubles in 6 Months: How to Play?

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Key Takeaways

  • VFF shares more than doubled in six months, far outpacing the industry and major indexes.
  • VFF's rally is driven by stronger cannabis execution, higher margins and disciplined cost control.
  • Village Farms benefits from growing medical cannabis exports, and the Netherlands gains.

Village Farms International, Inc. (VFF - Free Report) has been on a strong run, with the stock more than doubling over the past six months and outperforming broader market benchmarks. The company’s shares have soared 154.8% in the past six months against the industry’s dip of 7.9% as well as the Zacks Consumer Staples sector’s 3.2% decline. Meanwhile, the S&P 500 Index saw an increase of 13.1%.

VFF’s performance has also surpassed several peers. Tilray Brands (TLRY - Free Report) and Mission Produce (AVO - Free Report) advanced 58.8% and 1.3%, respectively, over the same time frame, while Scotts Miracle-Gro (SMG - Free Report) declined about 5%.

The sharp rally reflects a noticeable improvement in investor sentiment, supported by stronger operating performance, rising profitability and improved financial consistency. After periods of uneven results in earlier quarters, recent financial results reflect stronger margins, improved cash generation and more consistent execution.

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What’s Powering VFF Stock’s Price Surge?

Village Farms’ recent share price strength is largely tied to improved execution in its core cannabis operations, particularly in Canada. In the third quarter of fiscal 2025, its wholly owned subsidiary, Pure Sunfarms, posted strong results, supported by higher sales, sharply improved margins and disciplined cost management. The segment continued to generate solid adjusted EBITDA, standing out in a cannabis market still facing pricing pressure and intense competition.

Operational efficiency remains a key factor. Management highlighted the company’s low-cost cultivation model and large-scale greenhouse assets, which helped expand margins and support operating cash flow despite a challenging pricing environment.

International cannabis operations also contributed positively. Village Farms reported strong growth in medical cannabis exports, particularly in Europe, helping diversify revenues beyond the competitive Canadian market. The Netherlands cannabis business continued to show progress during the quarter, supported by improving sales and broader market penetration, with expansion plans remaining on track.

In addition, Village Farms maintains exposure to the U.S. hemp-derived cannabinoid market through its Balanced Health Botanicals business. While regulatory uncertainty remains, management continues to view this segment as a longer-term opportunity.

Overall, the latest earnings call emphasized a continued focus on profitability, cash flow generation and balance sheet strength, supporting the company’s recent operating momentum.

Near-Term Hurdles for Village Farms

Despite the strong momentum, Village Farms still faces several near-term challenges. Pricing pressure in the Canadian cannabis market remains an ongoing concern, as competition stays intense and retail conditions remain uneven. While the company’s cost structure offers some protection, prolonged price pressure could weigh on near-term results.

Regulatory uncertainty, particularly in the United States, also remains a hurdle. In addition, inflation and input-cost volatility could impact margins if cost pressures intensify, making execution and cost control critical going forward.

VFF’s Valuation: Still Room for Upside?

Even after the recent rally, Village Farms’ valuation still looks reasonable. The stock trades at a price-to-sales ratio of 1.57, below the industry average of 2.11, suggesting that investors continue to price in risks related to cannabis industry volatility and regulatory uncertainty. Village Farms currently has a Value Score of C. Several peers trade at lower sales multiples, with AVO at 0.69, SMG at 1.07 and TLRY at 1.22, reflecting more conservative expectations around their growth outlooks and operating visibility.

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How Are Estimates for Village Farms Trending?

Analysts’ estimates for Village Farms have been steady, indicating stable expectations around near-term performance. The Zacks Consensus Estimate for the current and next fiscal year earnings per share (EPS) has remained unchanged in the past 60 days.

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Village Farms: In a Nutshell

Village Farms’ strong six-month rally reflects improving execution, better profitability and stronger cash generation. The company has made clear progress in stabilizing its core operations and expanding higher-margin opportunities. However, ongoing industry challenges, regulatory uncertainty and pricing pressures remain key factors to watch. With earnings estimates holding steady and much of the recent improvement already reflected in the share price, the stock offers a more balanced risk-reward profile at current levels. 

VFF currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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