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Reasons Why TreeHouse Foods (THS) Should be in Your Portfolio
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TreeHouse Foods, Inc. (THS - Free Report) is well-poised for growth, courtesy of its strength across end markets, effective pricing actions, acquired assets and focus on operational execution. Despite a challenging macro landscape, the company’s focus on supply-chain improvements has helped it enhance services and cater to high customer demand.
TreeHouse Foods has a market capitalization of $2.8 billion. This Zacks Rank #1 (Strong Buy) company belongs to the Zacks Food - Miscellaneous industry, which comes under the ambit of the Zacks Consumer Staples sector.
In the past year, the company has gained 14.7%, outperforming the industry’s growth of 3.6%.
Image Source: Zacks Investment Research
Let’s delve into the factors that have been aiding this manufacturer of packaged foods and beverages for a while now.
Business Strength: TreeHouse Foods has been benefiting from solid demand for its snacking and beverage product categories. In the first quarter of 2023, the company generated net sales of $894.8 million, reflecting growth of 15.8% year over year.
Growth in net sales was mainly driven by solid product demand, favorable pricing actions and improved services in most categories that enabled it to cater to the favorable demand. The company’s effective pricing actions are likely to continue working well amid cost inflation.
For 2023, TreeHouse Foods expects net sales growth of 6-8% year over year in the band of $3.66-$3.73 billion. Adjusted EBITDA is likely to be in the $345-$365 million range, up about 24% year over year at the midpoint. In 2023, the company's results are likely to be driven by pricing, better execution and supply-chain recovery.
Benefits from Inorganic Moves: TreeHouse Foods believes in strengthening its businesses through the addition of assets. In June 2023, the company closed the buyout of Farmer Brothers Company's Northlake, TX, coffee facility and non-Direct Store Delivery coffee business. The acquisition will strengthen THS' position in the private-label snacking and beverage industry while also propelling its presence in the thriving coffee sector. In April 2023, it added seasoned pretzel capabilities to its portfolio to keep up with consumer demand.
Also, the company remains open to selling its underperforming businesses, which enables it to focus on and efficiently direct resources to its core businesses. In October 2022, TreeHouse Foods divested a significant portion of its Meal Preparation business. This will enable it to capitalize on solid demand trends and fuel growth across its snacking and beverage categories.
Reduction of Debt: THS remains focused on reducing its debt obligations. Its debt load declined from $2.2 billion in 2020 to $1.4 billion in 2022. Exiting the first quarter of 2023, its long-term debt was about $1.4 billion, almost in line with the preceding quarter’s level. The company’s times interest earned ratio is 1.5, better than the preceding quarter’s level of 0.9.
Estimate Revisions: In the past 30 days, earnings estimates for TreeHouse Foods have been raised. The Zacks Consensus Estimate for its earnings is pegged at $2.61 for 2023 and $3.05 for 2024, suggesting growth of 2.8% and 3.7% from the respective 30-day-ago figures.
Other Stocks to Consider
Some other top-ranked stocks are Ingredion Incorporated (INGR - Free Report) , Celsius Holdings, Inc. (CELH - Free Report) and Lamb Weston Holdings, Inc. (LW - Free Report) . INGR sports a Zacks Rank #1, and CELH and LW carry a Zacks Rank #2 (Buy).
Ingredion is a producer and distributor of sweeteners, nutrition ingredients and biomaterial solutions. The Zacks Consensus Estimate for INGR’s current financial-year earnings per share is expected to rise by 22.2% from the corresponding year-ago reported figure.
Celsius Holdings is a leading provider of functional drinks and liquid supplements in the United States. The Zacks Consensus Estimate for CELH’s current financial-year sales suggests 69.6% growth, while earnings per share are expected to increase by 154.4% from the corresponding year-ago reported figures.
Lamb Weston is engaged in producing and marketing value-added frozen potato products worldwide. The Zacks Consensus Estimate for LW’s current financial-year sales and earnings per share are expected to increase by 29.6% and 117.3%, respectively, from the year-ago reported figures.
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Reasons Why TreeHouse Foods (THS) Should be in Your Portfolio
TreeHouse Foods, Inc. (THS - Free Report) is well-poised for growth, courtesy of its strength across end markets, effective pricing actions, acquired assets and focus on operational execution. Despite a challenging macro landscape, the company’s focus on supply-chain improvements has helped it enhance services and cater to high customer demand.
TreeHouse Foods has a market capitalization of $2.8 billion. This Zacks Rank #1 (Strong Buy) company belongs to the Zacks Food - Miscellaneous industry, which comes under the ambit of the Zacks Consumer Staples sector.
In the past year, the company has gained 14.7%, outperforming the industry’s growth of 3.6%.
Image Source: Zacks Investment Research
Let’s delve into the factors that have been aiding this manufacturer of packaged foods and beverages for a while now.
Business Strength: TreeHouse Foods has been benefiting from solid demand for its snacking and beverage product categories. In the first quarter of 2023, the company generated net sales of $894.8 million, reflecting growth of 15.8% year over year.
Growth in net sales was mainly driven by solid product demand, favorable pricing actions and improved services in most categories that enabled it to cater to the favorable demand. The company’s effective pricing actions are likely to continue working well amid cost inflation.
For 2023, TreeHouse Foods expects net sales growth of 6-8% year over year in the band of $3.66-$3.73 billion. Adjusted EBITDA is likely to be in the $345-$365 million range, up about 24% year over year at the midpoint. In 2023, the company's results are likely to be driven by pricing, better execution and supply-chain recovery.
Benefits from Inorganic Moves: TreeHouse Foods believes in strengthening its businesses through the addition of assets. In June 2023, the company closed the buyout of Farmer Brothers Company's Northlake, TX, coffee facility and non-Direct Store Delivery coffee business. The acquisition will strengthen THS' position in the private-label snacking and beverage industry while also propelling its presence in the thriving coffee sector. In April 2023, it added seasoned pretzel capabilities to its portfolio to keep up with consumer demand.
Also, the company remains open to selling its underperforming businesses, which enables it to focus on and efficiently direct resources to its core businesses. In October 2022, TreeHouse Foods divested a significant portion of its Meal Preparation business. This will enable it to capitalize on solid demand trends and fuel growth across its snacking and beverage categories.
Reduction of Debt: THS remains focused on reducing its debt obligations. Its debt load declined from $2.2 billion in 2020 to $1.4 billion in 2022. Exiting the first quarter of 2023, its long-term debt was about $1.4 billion, almost in line with the preceding quarter’s level. The company’s times interest earned ratio is 1.5, better than the preceding quarter’s level of 0.9.
Estimate Revisions: In the past 30 days, earnings estimates for TreeHouse Foods have been raised. The Zacks Consensus Estimate for its earnings is pegged at $2.61 for 2023 and $3.05 for 2024, suggesting growth of 2.8% and 3.7% from the respective 30-day-ago figures.
Other Stocks to Consider
Some other top-ranked stocks are Ingredion Incorporated (INGR - Free Report) , Celsius Holdings, Inc. (CELH - Free Report) and Lamb Weston Holdings, Inc. (LW - Free Report) . INGR sports a Zacks Rank #1, and CELH and LW carry a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Ingredion is a producer and distributor of sweeteners, nutrition ingredients and biomaterial solutions. The Zacks Consensus Estimate for INGR’s current financial-year earnings per share is expected to rise by 22.2% from the corresponding year-ago reported figure.
Celsius Holdings is a leading provider of functional drinks and liquid supplements in the United States. The Zacks Consensus Estimate for CELH’s current financial-year sales suggests 69.6% growth, while earnings per share are expected to increase by 154.4% from the corresponding year-ago reported figures.
Lamb Weston is engaged in producing and marketing value-added frozen potato products worldwide. The Zacks Consensus Estimate for LW’s current financial-year sales and earnings per share are expected to increase by 29.6% and 117.3%, respectively, from the year-ago reported figures.