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, Inc.(THS - Free Report) reported better-than-expected fourth-quarter 2016 results, after a weak third quarter performance. The acquisition of Private Brands business from ConAgra Foods, Inc. (CAG - Free Report) (closed in Feb 2016) led to the growth. Shares of the food company gained 12.4% yesterday.
The Illinois-based food company posted adjusted earnings per share of $1.14 in the fourth-quarter 2016. Earnings exceeded both the Zacks Consensus Estimate and the prior-year quarter’s earnings of $1.08 by 5.6% and were ahead of the company’s guided range of $1.07−$1.12 per share. Higher net sales driven by volume growth in base business has more than offset the lower gross margin related to the acquisition of the Private Brands business, which has a lower margin structure than the legacy TreeHouse business.
Net sales of $1.78 billion also surged 105.3% and beat the Zacks Consensus Estimate of $1.76 billion by 1.1%. The acquisition of the private brands operations and favorable volume/mix, primarily in the North American Retail Grocery segment, drove the sales. It was however partially offset by lower pricing. All the segments posted strong growth on a year-over-year basis.
Coming to the share price movement, Treehouse Foods has outperformed the Zacks categorized Food-Miscellaneous/Diversified industry in the last three months. While the industry grew 4.9%, the stock gave a return of 34.2%, over the same time frame.
Gross margin was 19.7% in the fourth quarter, down 130 basis points from year-ago figure of 21.0%. The decline was due to lower margin business from the Private Brands acquisition, unfavorable pricing and higher incentive compensation, partially offset by operating efficiencies and lower input costs.
Adjusted EBITDA increased 74.9% to $210.3 million, driven by the inclusion of operating income from the Private Brands acquisition and favorable commodity costs, partially offset by higher costs, unfavorable pricing primarily from competitive pressure, and higher variable incentive compensation.
Treehouse Foods, Inc. Price, Consensus and EPS Surprise
North American Retail Grocery: Segment sales surged 123.3% to $1.49 billion, driven by acquisitions and higher volume, offset by unfavorable pricing. Operating income increased 14.3% to $213.2 million in the quarter.
Food Away From Home: Segment sales grew 69.5% to $152 million, driven by acquisitions which more than offset the unfavorable impact from volume/mix and pricing. Operating income increased 12.3% to $18.7 million in the quarter.
Industrial and Export: Segment sales increased 22.8% to $131.4 million, driven by acquisitions and higher volume, offset by unfavorable pricing. Operating income increased 12.3% to $16.1 million in the quarter.
2016 Results
Adjusted earnings per share were $2.95 per share in 2016. Earnings exceeded the Zacks Consensus Estimate of $2.82 per share by 4.6% and were ahead of the company’s guided range of $2.80−$2.85 per share. However, it declined 7.8% from the prior-year quarter’s earnings of $3.20 per share.
Net sales were $6.18 billion in 2016, which surged 92.6% and also beat the Zacks Consensus Estimate of $6.16 billion by 0.2%.
2017 Outlook
The company expects the lower sales trends to continue in 2017 with overall top-line growth for the industry to be relatively flat. However, it anticipates margin improvement to persist in 2017 and 2018 as revenues from most of the Private Brands categories will begin to stabilize. TreeHouse remains on track to fully integrate its acquisition of the Private Brands business.
TreeHouse expects earnings in the range of $3.50 to $3.70 per share in 2017. Net sales are expected to increase to approximately $6.4–$6.6 billion in 2017, driven by volume gains and an additional month of sales from the Private Brands acquisition in 2017.
Gross margin is expected to be in a range of 19.5% to 20.5% due to favorable volume/mix, realized synergies from integrating the Private Brands Business, partially offset by an anticipated increase in commodity costs.
First Quarter 2017 Outlook
The company expects earnings in the range of 60 to 70 cents per share, compared to adjusted earnings of 48 cents per share in the first quarter of 2016. The expected increase is due to an additional month of Private Brands results and realized synergies from the Private Brands acquisition and facility restructurings.
Zacks Rank & Key Picks
TreeHouse carries a Zacks Rank #3 (Hold).
Some better-ranked food stocks in the industry include Lamb Weston Holdings Inc. (LW - Free Report) and Campbell Soup Company (CPB - Free Report) .
Campbell, carrying a Zacks Rank #2 (Buy), has growth rate of 5.56%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
TreeHouse Foods (THS) Q4 Earnings & Sales Beat Estimates
TreeHouse Foods, Inc.(THS - Free Report) reported better-than-expected fourth-quarter 2016 results, after a weak third quarter performance. The acquisition of Private Brands business from ConAgra Foods, Inc. (CAG - Free Report) (closed in Feb 2016) led to the growth. Shares of the food company gained 12.4% yesterday.
The Illinois-based food company posted adjusted earnings per share of $1.14 in the fourth-quarter 2016. Earnings exceeded both the Zacks Consensus Estimate and the prior-year quarter’s earnings of $1.08 by 5.6% and were ahead of the company’s guided range of $1.07−$1.12 per share. Higher net sales driven by volume growth in base business has more than offset the lower gross margin related to the acquisition of the Private Brands business, which has a lower margin structure than the legacy TreeHouse business.
Net sales of $1.78 billion also surged 105.3% and beat the Zacks Consensus Estimate of $1.76 billion by 1.1%. The acquisition of the private brands operations and favorable volume/mix, primarily in the North American Retail Grocery segment, drove the sales. It was however partially offset by lower pricing. All the segments posted strong growth on a year-over-year basis.
Coming to the share price movement, Treehouse Foods has outperformed the Zacks categorized Food-Miscellaneous/Diversified industry in the last three months. While the industry grew 4.9%, the stock gave a return of 34.2%, over the same time frame.
Gross margin was 19.7% in the fourth quarter, down 130 basis points from year-ago figure of 21.0%. The decline was due to lower margin business from the Private Brands acquisition, unfavorable pricing and higher incentive compensation, partially offset by operating efficiencies and lower input costs.
Adjusted EBITDA increased 74.9% to $210.3 million, driven by the inclusion of operating income from the Private Brands acquisition and favorable commodity costs, partially offset by higher costs, unfavorable pricing primarily from competitive pressure, and higher variable incentive compensation.
Treehouse Foods, Inc. Price, Consensus and EPS Surprise
Treehouse Foods, Inc. Price, Consensus and EPS Surprise | Treehouse Foods, Inc. Quote
Segment Details
North American Retail Grocery: Segment sales surged 123.3% to $1.49 billion, driven by acquisitions and higher volume, offset by unfavorable pricing. Operating income increased 14.3% to $213.2 million in the quarter.
Food Away From Home: Segment sales grew 69.5% to $152 million, driven by acquisitions which more than offset the unfavorable impact from volume/mix and pricing. Operating income increased 12.3% to $18.7 million in the quarter.
Industrial and Export: Segment sales increased 22.8% to $131.4 million, driven by acquisitions and higher volume, offset by unfavorable pricing. Operating income increased 12.3% to $16.1 million in the quarter.
2016 Results
Adjusted earnings per share were $2.95 per share in 2016. Earnings exceeded the Zacks Consensus Estimate of $2.82 per share by 4.6% and were ahead of the company’s guided range of $2.80−$2.85 per share. However, it declined 7.8% from the prior-year quarter’s earnings of $3.20 per share.
Net sales were $6.18 billion in 2016, which surged 92.6% and also beat the Zacks Consensus Estimate of $6.16 billion by 0.2%.
2017 Outlook
The company expects the lower sales trends to continue in 2017 with overall top-line growth for the industry to be relatively flat. However, it anticipates margin improvement to persist in 2017 and 2018 as revenues from most of the Private Brands categories will begin to stabilize. TreeHouse remains on track to fully integrate its acquisition of the Private Brands business.
TreeHouse expects earnings in the range of $3.50 to $3.70 per share in 2017. Net sales are expected to increase to approximately $6.4–$6.6 billion in 2017, driven by volume gains and an additional month of sales from the Private Brands acquisition in 2017.
Gross margin is expected to be in a range of 19.5% to 20.5% due to favorable volume/mix, realized synergies from integrating the Private Brands Business, partially offset by an anticipated increase in commodity costs.
First Quarter 2017 Outlook
The company expects earnings in the range of 60 to 70 cents per share, compared to adjusted earnings of 48 cents per share in the first quarter of 2016. The expected increase is due to an additional month of Private Brands results and realized synergies from the Private Brands acquisition and facility restructurings.
Zacks Rank & Key Picks
TreeHouse carries a Zacks Rank #3 (Hold).
Some better-ranked food stocks in the industry include Lamb Weston Holdings Inc. (LW - Free Report) and Campbell Soup Company (CPB - Free Report) .
Lamb Weston has long-term earnings growth rate of 3.24% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Campbell, carrying a Zacks Rank #2 (Buy), has growth rate of 5.56%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>