Treehouse Foods stock rises despite earnings miss

Investing.com -- Shares of Treehouse Foods (NYSE: THS) climbed 14% after the company's fourth-quarter earnings report. Despite earnings and revenue that fell short of analyst expectations, the market responded positively to the company's fiscal year 2025 guidance and recovery from previous supply chain issues.

Treehouse Foods reported a fourth-quarter EPS of $0.95, which was slightly below the analyst estimate of $0.97. Revenue for the quarter also missed the consensus estimate, coming in at $905.7 million compared to the expected $907.72 million. However, the company's guidance for fiscal year 2025 revenue is set at $3.34-3.4 billion, against a consensus of $3.42 billion, suggesting confidence in the company's future performance.

The company's net sales for the fourth quarter decreased by 0.6% to $905.7 million from $910.8 million in the same period last year. This slight decline was attributed to various factors, including the impact of facility restoration and product recall returns. However, gross profit as a percentage of net sales improved, rising from 16.7% in the fourth quarter of 2023 to 19.5% in the same quarter of 2024.

Treehouse Foods also highlighted a sequential improvement in net sales trends, gross profit margin, and Adjusted EBITDA margin, which were in line with updated expectations. Chairman, CEO, and President Steve Oakland emphasized the company's focus on driving more profitable business and efficiency across the organization.

Analysts provided mixed reactions to the earnings report. John Baumgartner of Mizuho (NYSE:MFG), maintaining a neutral stance, commented, "Q4’s revenue showed solid underlying volume/mix growth and moderating pricing pressure which we view as green shoots." Baumgartner also mentioned that some investors had feared a bigger miss on 2025 EBITDA guidance. "Overall, expectations for THS are low, and we suspect underlying Q4 net revenue will be viewed as more of a net positive than weaker Ebitda guidance is regarded as a net disappointment," Baumgartner stated.

Investors appeared to respond to the company's positive outlook and its steps toward recovery from previous setbacks, despite the slight misses in fourth-quarter earnings and revenue.

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