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On Friday, Stifel analysts adjusted their outlook on TreeHouse Foods (NYSE:THS), reducing the price target from the previous $35.00 to $26.00, while keeping a hold rating on the stock. The stock, currently trading near its 52-week low of $21.46, appears undervalued according to InvestingPro analysis, which identifies multiple value opportunities in the company's fundamentals. The revision follows TreeHouse Foods' preannouncement of its first-quarter results, which revealed revenue of at least $792 million and EBITDA of at least $52 million. This indicates a slight revenue decline of approximately 3.5% and a significant EBITDA increase of 13% compared to the same period last year. The company's trailing twelve-month EBITDA stands at $307 million, with a current ratio of 1.36 indicating solid short-term liquidity. For deeper insights into TreeHouse Foods' financial health and 14+ additional exclusive ProTips, consider accessing the comprehensive research available on InvestingPro.
The company's EBITDA performance was notably 24% higher than the mid-point of its first-quarter guidance range. The results surpassed Stifel's previous EBITDA estimate by roughly $7 million, bolstered by stronger than anticipated margin performance. TreeHouse Foods has reiterated its financial outlook for 2025, which includes anticipated cost savings from an operational enhancements plan unveiled on Friday. Despite operating with a modest gross profit margin of 16.47%, analysts expect net income growth this year.
TreeHouse Foods also provided an update on tariffs, indicating that only 5% of its sales are conducted outside the United States and that nearly all of its finished goods are compliant with the United States-Mexico-Canada Agreement (USMCA), suggesting the company may face minimal direct impact from tariffs. Stifel's maintained hold rating reflects their ongoing cautious stance on the stock despite the company's positive first-quarter performance and its strategic initiatives aimed at improving operations. The stock has experienced significant pressure, declining nearly 47% over the past six months, though technical indicators suggest it may be approaching oversold territory.
In other recent news, TreeHouse Foods announced its preliminary earnings estimates for the first quarter, projecting adjusted net sales of at least $792 million and adjusted EBITDA of at least $52 million. This comes after the company reported a slight miss in its fourth-quarter earnings, with revenue reaching $905.7 million, just below the forecast of $907.72 million. Despite the miss, TreeHouse Foods reaffirmed its financial guidance for 2025, expecting adjusted annual net sales between $3.34 billion and $3.40 billion, and adjusted EBITDA from continuing operations in the range of $345 million to $375 million. The company also completed the acquisition of Harris Tea, which is expected to enhance its private label tea category.
Stifel analysts recently adjusted their outlook on TreeHouse Foods, lowering the price target from $35.00 to $26.00 while maintaining a Hold rating. This revision followed TreeHouse Foods' preannouncement of stronger-than-expected first-quarter performance. The company also confirmed its guidance for 2025, which includes anticipated cost savings from an operational enhancements plan. Additionally, TreeHouse Foods highlighted that nearly all its finished goods are compliant with the United States-Mexico-Canada Agreement (USMCA), suggesting minimal direct impact from tariffs.
The company is undergoing significant organizational changes to increase operational efficiency and cost savings, which include the centralization of corporate support functions and the departure of a key executive. TreeHouse Foods continues to focus on improving its margin structure amidst challenges in the packaged food sector, with analysts expressing a positive view on its strategic focus on margin improvement. The company is also targeting supply chain savings of $250 million through 2027, indicating a long-term commitment to enhancing financial performance.
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