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TreeHouse Foods (THS) Looks Promising: Pricing a Major Driver
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TreeHouse Foods, Inc. (THS - Free Report) appears in a solid position due to the favorable demand for private label products and efficient pricing initiatives. These have been aiding the company amid escalated cost concerns.
The company’s focus on refining the portfolio by concentrating on areas with high growth potential is also working well. To this end, TreeHouse Foods recently entered a definitive agreement to sell its Meal Preparation business to Investindustrial for $950 million. The proceeds from this deal are likely to be utilized to lower debt and strengthen the balance sheet.
Let’s delve deeper into the factors working well for this Zacks Rank #1 (Strong Buy) company, which has seen its shares rise 6.2% in the past three months against the industry’s decline of 7.1%.
Image Source: Zacks Investment Research
Factors Aiding TreeHouse Foods
TreeHouse Foods has been gaining from its efficient pricing efforts.
In the second quarter of 2022, TreeHouse Foods’ top line increased year over year, with pricing being the main driver. Net sales of $1,197.6 million surpassed the consensus mark of $1,104 million and advanced 19.4% year over year. Pricing increased 17.7%. Organic sales grew 19.8%. Better pricing was the main driver, which helped the company counter commodity and freight cost inflation.
The company remains on track with its pricing actions to recover further inflation. Also, the company expects to benefit from further actions to mitigate the impacts of labor and supply-chain disruptions, which will aid margin enhancement as 2022 progresses.
TreeHouse Foods is benefiting from the sturdy demand for its private label products, which keeps it well-placed for growth. In the second quarter of 2022, THS witnessed the continued accelerated demand for its private label categories.
The company is also focused on cost control and continuous improvement efforts to drive savings. Encouraged by the robust demand for private label products, management remains on track with fulfilling incremental orders despite the ongoing labor shortage and lack of materials availability.
For 2022, management expects net sales growth in the mid-to-high teens, mainly fueled by pricing actions to mitigate inflation, low-single-digit volume growth and strengthening private label demand. Adjusted EBITDA is estimated in the band of $385-$415 million for 2022, indicating growth of 5% at the midpoint.
Therefore, TreeHouse Foods is likely to remain on the growth trajectory.
Lancaster Colony, which manufactures and markets food products for the retail and foodservice markets, currently sports a Zacks Rank of 1. LANC delivered an earnings surprise of 170% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lancaster Colony’s current financial-year sales and EPS suggests growth of 9.6% and 38.3%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 47.3%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 14.8% and 42.3%, respectively, from the year-ago reported numbers.
The J. M. Smucker, which manufactures and markets branded food and beverage products, carries a Zacks Rank #2 (Buy) at present. The J. M. Smucker has a trailing four-quarter earnings surprise of 20.8%, on average.
The Zacks Consensus Estimate for SJM’s current financial-year sales suggests growth of 4.4% from the year-ago reported number.
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TreeHouse Foods (THS) Looks Promising: Pricing a Major Driver
TreeHouse Foods, Inc. (THS - Free Report) appears in a solid position due to the favorable demand for private label products and efficient pricing initiatives. These have been aiding the company amid escalated cost concerns.
The company’s focus on refining the portfolio by concentrating on areas with high growth potential is also working well. To this end, TreeHouse Foods recently entered a definitive agreement to sell its Meal Preparation business to Investindustrial for $950 million. The proceeds from this deal are likely to be utilized to lower debt and strengthen the balance sheet.
Let’s delve deeper into the factors working well for this Zacks Rank #1 (Strong Buy) company, which has seen its shares rise 6.2% in the past three months against the industry’s decline of 7.1%.
Image Source: Zacks Investment Research
Factors Aiding TreeHouse Foods
TreeHouse Foods has been gaining from its efficient pricing efforts.
In the second quarter of 2022, TreeHouse Foods’ top line increased year over year, with pricing being the main driver. Net sales of $1,197.6 million surpassed the consensus mark of $1,104 million and advanced 19.4% year over year. Pricing increased 17.7%. Organic sales grew 19.8%. Better pricing was the main driver, which helped the company counter commodity and freight cost inflation.
The company remains on track with its pricing actions to recover further inflation. Also, the company expects to benefit from further actions to mitigate the impacts of labor and supply-chain disruptions, which will aid margin enhancement as 2022 progresses.
TreeHouse Foods is benefiting from the sturdy demand for its private label products, which keeps it well-placed for growth. In the second quarter of 2022, THS witnessed the continued accelerated demand for its private label categories.
The company is also focused on cost control and continuous improvement efforts to drive savings. Encouraged by the robust demand for private label products, management remains on track with fulfilling incremental orders despite the ongoing labor shortage and lack of materials availability.
For 2022, management expects net sales growth in the mid-to-high teens, mainly fueled by pricing actions to mitigate inflation, low-single-digit volume growth and strengthening private label demand. Adjusted EBITDA is estimated in the band of $385-$415 million for 2022, indicating growth of 5% at the midpoint.
Therefore, TreeHouse Foods is likely to remain on the growth trajectory.
Other Stocks Worth a Look
Some other top-ranked stocks from the sector are Lancaster Colony (LANC - Free Report) , Lamb Weston (LW - Free Report) and The J. M. Smucker (SJM - Free Report) .
Lancaster Colony, which manufactures and markets food products for the retail and foodservice markets, currently sports a Zacks Rank of 1. LANC delivered an earnings surprise of 170% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lancaster Colony’s current financial-year sales and EPS suggests growth of 9.6% and 38.3%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 47.3%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 14.8% and 42.3%, respectively, from the year-ago reported numbers.
The J. M. Smucker, which manufactures and markets branded food and beverage products, carries a Zacks Rank #2 (Buy) at present. The J. M. Smucker has a trailing four-quarter earnings surprise of 20.8%, on average.
The Zacks Consensus Estimate for SJM’s current financial-year sales suggests growth of 4.4% from the year-ago reported number.