We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
TreeHouse Foods (THS) Gains on Solid Private Label & Pricing
Read MoreHide Full Article
Focus on strategic pricing efforts is favoring TreeHouse Foods, Inc. (THS - Free Report) . The manufacturer of packaged foods and beverages is benefiting from the sturdy demand for its private-label products. The company is keen on refining its portfolio, which is yielding.
That being said, TreeHouse Foods is not immune to the rising inflationary environment and supply chain-related issues.
Let’s delve deeper.
Strategic Pricing: Key Driver
TreeHouse Foods is gaining from its efficient pricing efforts. In the third quarter of 2022, TreeHouse Foods’ top line increased year over year, with pricing being the main driver. Net sales of $875 million advanced 16.4%, with pricing increasing 20.7%. Organic sales rose 16.5%. Better pricing was the main driver, which helped the company counter inflationary headwinds.
For the fourth quarter of 2022, TreeHouse Foods anticipates net sales (from continuing operations) growth of 22-24%, mainly backed by pricing. It expects an adjusted EBITDA margin of 10.5-12%, indicating sequential growth due to pricing actions undertaken to date, cost-saving efforts and peak seasonality. Management expects net sales growth to be strong in fiscal 2023 due to the company’s pricing actions to counter inflation in 2022.
Image Source: Zacks Investment Research
What Else is Driving Growth?
TreeHouse Foods is benefiting from the sturdy demand for its private-label products, which keeps it well-placed for growth. In the third quarter, TreeHouse Foods saw continued market share gains for private labels. In its last earnings call, management highlighted that it anticipates private label demand to remain solid owing to the economic backdrop amid historical downturns. Private label benefits as consumers continue to stretch their dollars.
TreeHouse Foods has always been focused on expanding its product offerings through acquisitions. In December 2020, the company concluded the buyout of the majority of Riviana Foods’ U.S. branded pasta portfolio. Earlier, in February 2016, TreeHouse Foods acquired Private Brands business for $2.7 billion.
The company is committed to exiting underperforming businesses and shifting focus toward areas with high growth potential. On Oct 3, 2022, TreeHouse Foods concluded the sale of a significant portion of its Meal Preparation business. The divestiture placed THS well to capitalize on solid demand trends and fuel growth across its higher-margin private-label snacking and beverage categories. This portfolio-reshaping action highlights the company’s focus on areas with higher growth potential and solidifies its balance sheet.
Prior to this, it concluded the sale of its Ready-to-eat Cereal business to Post Holdings in June 2021 and the divestiture of the Snack business to Atlas Holdings on Aug 1, 2019. Further, TreeHouse Foods offloaded two of its in-store bakery facilities to Rich Products Corporation in April 2020.
What’s Hurting TreeHouse Foods?
In the third quarter of 2022, TreeHouse Foods’ gross margin of 14.8% contracted 1.9 percentage points from the year-ago quarter’s figure, mainly due to additional costs associated with labor and supply-chain disruptions. Also, warehouse capacity hurdles were a downside. Adjusted EBITDA from continuing operations came in at $76.6 million, down by $9.2 million due to additional costs associated with labor and supply-chain bottlenecks amid a tough macro environment.
In its last earnings call, management highlighted that input cost inflation continued across certain commodities like coco. The company has been seeing the impact of rising input costs across non-trading commodities. Headwinds related to labor and supply chain continue to be a persistent issue.
That said, we believe that well-chalked growth endeavors like strategic pricing actions, portfolio refining efforts and strength in the private label will likely keep THS’s growth story going. The Zacks Rank #3 (Hold) stock has risen 21% in the past six months compared with the industry’s 10.2% growth.
The Chef's Warehouse, which distributes specialty food products, currently sports a Zacks Rank #1 (Strong Buy). Chef's Warehouse has a trailing four-quarter earnings surprise of 93.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CHEF’s current financial year sales suggests growth of 46.5% from the year-ago reported number, while earnings indicate significant growth.
Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current financial year sales and earnings suggests growth of 5.2% and 3.4%, respectively, from the corresponding year-ago reported figures.
The J. M. Smucker, which manufactures and markets branded food and beverage products, currently carries a Zacks Rank of 2. SJM has a trailing four-quarter earnings surprise of 18.5%, on average.
The Zacks Consensus Estimate for The J. M. Smucker’s current financial-year sales suggests growth of 5.6% from the year-ago reported figure.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
TreeHouse Foods (THS) Gains on Solid Private Label & Pricing
Focus on strategic pricing efforts is favoring TreeHouse Foods, Inc. (THS - Free Report) . The manufacturer of packaged foods and beverages is benefiting from the sturdy demand for its private-label products. The company is keen on refining its portfolio, which is yielding.
That being said, TreeHouse Foods is not immune to the rising inflationary environment and supply chain-related issues.
Let’s delve deeper.
Strategic Pricing: Key Driver
TreeHouse Foods is gaining from its efficient pricing efforts. In the third quarter of 2022, TreeHouse Foods’ top line increased year over year, with pricing being the main driver. Net sales of $875 million advanced 16.4%, with pricing increasing 20.7%. Organic sales rose 16.5%. Better pricing was the main driver, which helped the company counter inflationary headwinds.
For the fourth quarter of 2022, TreeHouse Foods anticipates net sales (from continuing operations) growth of 22-24%, mainly backed by pricing. It expects an adjusted EBITDA margin of 10.5-12%, indicating sequential growth due to pricing actions undertaken to date, cost-saving efforts and peak seasonality. Management expects net sales growth to be strong in fiscal 2023 due to the company’s pricing actions to counter inflation in 2022.
Image Source: Zacks Investment Research
What Else is Driving Growth?
TreeHouse Foods is benefiting from the sturdy demand for its private-label products, which keeps it well-placed for growth. In the third quarter, TreeHouse Foods saw continued market share gains for private labels. In its last earnings call, management highlighted that it anticipates private label demand to remain solid owing to the economic backdrop amid historical downturns. Private label benefits as consumers continue to stretch their dollars.
TreeHouse Foods has always been focused on expanding its product offerings through acquisitions. In December 2020, the company concluded the buyout of the majority of Riviana Foods’ U.S. branded pasta portfolio. Earlier, in February 2016, TreeHouse Foods acquired Private Brands business for $2.7 billion.
The company is committed to exiting underperforming businesses and shifting focus toward areas with high growth potential. On Oct 3, 2022, TreeHouse Foods concluded the sale of a significant portion of its Meal Preparation business. The divestiture placed THS well to capitalize on solid demand trends and fuel growth across its higher-margin private-label snacking and beverage categories. This portfolio-reshaping action highlights the company’s focus on areas with higher growth potential and solidifies its balance sheet.
Prior to this, it concluded the sale of its Ready-to-eat Cereal business to Post Holdings in June 2021 and the divestiture of the Snack business to Atlas Holdings on Aug 1, 2019. Further, TreeHouse Foods offloaded two of its in-store bakery facilities to Rich Products Corporation in April 2020.
What’s Hurting TreeHouse Foods?
In the third quarter of 2022, TreeHouse Foods’ gross margin of 14.8% contracted 1.9 percentage points from the year-ago quarter’s figure, mainly due to additional costs associated with labor and supply-chain disruptions. Also, warehouse capacity hurdles were a downside. Adjusted EBITDA from continuing operations came in at $76.6 million, down by $9.2 million due to additional costs associated with labor and supply-chain bottlenecks amid a tough macro environment.
In its last earnings call, management highlighted that input cost inflation continued across certain commodities like coco. The company has been seeing the impact of rising input costs across non-trading commodities. Headwinds related to labor and supply chain continue to be a persistent issue.
That said, we believe that well-chalked growth endeavors like strategic pricing actions, portfolio refining efforts and strength in the private label will likely keep THS’s growth story going. The Zacks Rank #3 (Hold) stock has risen 21% in the past six months compared with the industry’s 10.2% growth.
3 Solid Staple Picks
Some top-ranked stocks are The Chef's Warehouse (CHEF - Free Report) , Conagra Brands (CAG - Free Report) and The J. M. Smucker Company (SJM - Free Report) .
The Chef's Warehouse, which distributes specialty food products, currently sports a Zacks Rank #1 (Strong Buy). Chef's Warehouse has a trailing four-quarter earnings surprise of 93.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CHEF’s current financial year sales suggests growth of 46.5% from the year-ago reported number, while earnings indicate significant growth.
Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current financial year sales and earnings suggests growth of 5.2% and 3.4%, respectively, from the corresponding year-ago reported figures.
The J. M. Smucker, which manufactures and markets branded food and beverage products, currently carries a Zacks Rank of 2. SJM has a trailing four-quarter earnings surprise of 18.5%, on average.
The Zacks Consensus Estimate for The J. M. Smucker’s current financial-year sales suggests growth of 5.6% from the year-ago reported figure.