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Freshpet's (FRPT) Preliminary Q4 Sales Numbers Indicate Y/Y Growth

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Increased stay-at-home trends and fewer social gatherings amid the pandemic have given way to elevated anxiety and loneliness among people. Consequently, pets have emerged as new companions, becoming an integral part of people’s lives. Certainly, this has been working well for companies offering pet-related products such as Freshpet, Inc. (FRPT - Free Report) , which provided preliminary fourth-quarter 2020 net sales and adjusted EBITDA view.

Notably, the preliminary data provided by this manufacturer and marketer of natural fresh products, treats and refrigerated meals for dogs and cats reflect solid demand witnessed in the fourth quarter, though supply-related limitations were concerning. That said, let’s delve deeper into Freshpet’s fourth-quarter preliminary net sales and adjusted EBITDA numbers.

Q4 & 2020 View

Preliminary net sales for the quarter are anticipated to be $84.5 million, which indicates an increase of 29% from the year-ago period’s figure. Further, management anticipates an adjusted EBITDA of roughly $12 million in the fourth quarter.

For 2020, Freshpet envisions net sales of nearly $318.8 million, while adjusted EBITDA is likely to be around $46 million. Markedly, the company posted net sales of $245.9 million in 2019 and adjusted EBITDA came in at $29.2 million. The Zacks Consensus Estimate for 2020 net sales is currently pegged at $322.76 million.

What’s More

Management remains satisfied with its preliminary fourth-quarter outcome, given the pandemic-led hurdles faced by the company during the latter half of the quarter. Incidentally, labor-related disruptions and major weather impacts on the company’s distribution channel due to coronavirus hampered the performance. Nonetheless, management remains encouraged about the robust traction it has been witnessing among its new as well as existing pet parents.

Notably, the underlying buy rate has been greater than expected and has risen in the past five years, with the household penetration having increased at a rate of more than 20% in the past two years. These trends have encouraged the company to contemplate elevated investments toward expanding capacity, in order to effectively meet the rising demand from customers looking for better-for-you food options for their pets.

Wrapping Up

We note that pet owners have been going all the way to ensure the well-being of their loyal companions by preferring natural products with quality ingredients and better packaging. Apart from food, sales of other pet essentials such as toys, litter and bedding, harnesses and leashes as well as waste management supplies are gaining traction. Moving on, technology advancement is another factor that is reshaping the pet industry. Notably, automated-feeders, pet “fitbits”, automated pet toys and pet cams have flooded the market recently. Given the rising interest in pet adoption, several companies such as Tractor Supply (TSCO - Free Report) , Spectrum Brands (SPB - Free Report) and General Mills (GIS - Free Report) have bumped up investments in this lucrative space.

Coming back to Freshpet, the company is poised to continue gaining from favorable demand, especially amid the pandemic. Also, the focus on innovation has been a major driver. Evidently, innovation and distribution gains, among other factors, helped the company’s sales advance 29% to $84.2 million in the last reported quarter. Impressively, this Zacks Rank #3 (Hold) stock has rallied almost 14% in the past three months, easily outpacing the industry’s growth of 1.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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