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Freshpet (FRPT)
NASDAQ:FRPT
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Freshpet
(NASDAQ:FRPT)
61Neutral
Positive Factors
Product innovation
Introductions of new multi-packs and an entry-level bag product will attract new consumers to the brand when they launch later this year.
Sales performance
Costco is expected to contribute positively to sales, adding approximately 50 basis points.
Negative Factors
Market performance
The recommendation for FRPT shares has been downgraded to Perform from Outperform due to disappointing guidance and subdued commentary from management.
Operational disruptions
Freshpet's new distributor in the pet specialty channel ran into ERP disruptions, which led to out-of-stocks in the channel.
Sales growth
The sales growth estimate for Freshpet Inc has been lowered due to adjustments in data capture.
Freshpet (FRPT) vs. S&P 500 (SPY)
Market Cap
$4.11B
Dividend YieldN/A
Average Volume (3M)2.15M
Price to Earnings (P/E)90.5
Beta (1Y)1.35
Revenue Growth27.16%
EPS GrowthN/A
CountryUS
Employees1,296
SectorConsumer Defensive
Sector Strength73
IndustryPackaged Foods
Share Statistics
EPS (TTM)0.93
Shares Outstanding48,718,620
10 Day Avg. Volume2,101,967
30 Day Avg. Volume2,151,221
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)4.33
Price to Cash Flow (P/CF)21.00
P/FCF Ratio20.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$139.85Price Target Upside65.72% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering14
Freshpet Business Overview & Revenue Model
Company DescriptionFreshpet, Inc. manufactures and markets natural fresh meals and treats for dogs and cats in the United States, Canada, and Europe. The company sells its products under the Freshpet brand; and Dognation and Dog Joy labels through various classes of retail, including grocery, mass, club, pet specialty, and natural, as well as online. Freshpet, Inc. was incorporated in 2004 and is headquartered in Secaucus, New Jersey.
How the Company Makes MoneyFreshpet generates revenue through the sale of its fresh, refrigerated pet food products to a wide range of retail partners, including grocery stores, mass merchandisers, club stores, and pet specialty retailers. The company’s business model centers on producing high-quality, perishable pet food that requires refrigeration, thereby setting it apart from traditional dry or canned pet food. Freshpet's products are positioned as premium offerings, allowing the company to capture higher price points. Additionally, the company benefits from recurring revenue as pet owners regularly purchase food for their pets. Key partnerships with large retail chains and an expanding distribution network significantly contribute to its earnings, along with consistent marketing efforts to raise brand awareness and encourage consumer adoption.
Freshpet Financial Statement Overview
Summary
Freshpet's financial performance is solid, marked by strong revenue growth and improved profitability. The income statement shows substantial revenue and margin improvements, while the balance sheet is stable with manageable leverage. Cash flow improvements indicate good financial health, although there's room for operational efficiency enhancements.Income Statement
Freshpet has demonstrated strong revenue growth, with a notable increase of 27.1% from FY 2023 to FY 2024. The gross profit margin has improved significantly to 40.6% in FY 2024, indicating enhanced efficiency. The net profit margin turned positive at 4.8%, showcasing a recovery from previous losses. However, the EBIT margin is relatively low at 3.9%, suggesting room for improvement in operational efficiency.78
Positive
Balance Sheet
The company's balance sheet is stable with a debt-to-equity ratio of 0.40, reflecting a manageable level of leverage. Return on equity improved to 4.4%, indicating better utilization of equity. The equity ratio stands at 67.0%, signifying a strong equity base. Nonetheless, the increase in total debt necessitates careful monitoring.72
Positive
Cash Flow
Freshpet's free cash flow turned positive in FY 2024, driven by a substantial increase in operating cash flow, which is a positive sign of financial health. The operating cash flow to net income ratio is at 3.29, indicating strong cash generation relative to net income. The free cash flow to net income ratio also reflects a robust alignment between cash generation and profitability.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 975.18M | 766.89M | 595.34M | 425.49M | 318.79M | Gross Profit |
| 395.96M | 250.87M | 186.03M | 162.15M | 132.91M | EBIT |
| 38.00M | -30.45M | -51.98M | -24.65M | -1.91M | EBITDA |
| 38.00M | 41.10M | -14.35M | 7.15M | 19.21M | Net Income Common Stockholders |
| 46.92M | -33.61M | -55.76M | -27.69M | -3.19M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 268.63M | 296.87M | 132.74M | 72.79M | 67.25M | Total Assets |
| 1.57B | 1.46B | 1.13B | 784.41M | 434.39M | Total Debt |
| 424.09M | 425.06M | 5.71M | 7.09M | 8.40M | Net Debt |
| 155.46M | 128.18M | -127.03M | -65.69M | -58.85M | Total Liabilities |
| 519.52M | 510.97M | 93.81M | 64.66M | 40.22M | Stockholders Equity |
| 1.06B | 953.45M | 1.03B | 719.75M | 394.17M |
| Cash Flow | Free Cash Flow | |||
| 154.29M | -163.15M | -273.30M | -321.45M | -113.38M | Operating Cash Flow |
| 154.29M | 75.94M | -43.23M | 647.00K | 21.19M | Investing Cash Flow |
| -187.09M | -239.09M | -233.36M | -322.10M | -162.46M | Financing Cash Flow |
| 4.57M | 327.29M | 336.54M | 326.99M | 199.04M |
Freshpet Technical Analysis
Negative
84.39
Price Trends
118.68
Negative
134.25
Negative
133.17
Negative
Market Momentum
-8.51
Negative
31.35
Neutral
30.10
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FRPT, the sentiment is Negative. The current price of 84.39 is below the 20-day moving average (MA) of 88.46, below the 50-day MA of 118.68, and below the 200-day MA of 133.17, indicating a bearish trend. The MACD of -8.51 indicates Negative momentum. The RSI at 31.35 is Neutral, neither overbought nor oversold. The STOCH value of 30.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FRPT.
Freshpet Risk Analysis
Freshpet disclosed 35 risk factors in its most recent earnings report. Freshpet reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Freshpet Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $6.50B | 19.36 | 10.01% | ― | 7.32% | 34.44% | |
71 Outperform | $14.49B | 39.35 | 30.81% | ― | 12.90% | 50.20% | |
66 Neutral | $3.48B | 24.57 | 8.39% | ― | 9.07% | 5.85% | |
62 Neutral | $20.67B | 14.36 | -12.41% | 3.14% | 1.24% | 2.53% | |
61 Neutral | $4.11B | 90.47 | 4.67% | ― | 27.16% | ― | |
44 Neutral | $370.91M | ― | -19.41% | ― | -6.68% | -9.71% | |
39 Underperform | $40.03M | ― | 31.02% | ― | -11.65% | -174.54% |
* Consumer Defensive Sector Average
Performance Comparison
FRPT
Freshpet
84.39
-31.46
-27.16%
SMPL
Simply Good Foods
34.40
0.25
0.73%
POST
Post Holdings
115.10
9.66
9.16%
HAIN
Hain Celestial
4.11
-3.38
-45.13%
WW
WW International
0.50
-1.27
-71.75%
SFM
Sprouts Farmers
147.76
84.15
132.29%
Freshpet Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -35.37% | Next Earnings Date: May 12, 2025
Earnings Call Sentiment Positive
Freshpet had a strong fiscal year 2024, with significant growth in net sales, household penetration, and profitability. The company improved its adjusted gross margin significantly and expanded its distribution and capacity. Although there are challenges in the pet specialty channel and a temporary inventory-related impact on gross margin, the overall outlook remains positive.Highlights
Strong Full Year 2024 Results
Freshpet reported a 27% year-over-year increase in net sales, reaching $975 million, and achieved profitability with a net income of $0.94 per share. Adjusted EBITDA increased by 143% to $161.8 million.
Record Household Penetration
Freshpet added approximately 2 million new households, with 800,000 being super heavy and heavy users, marking the largest household penetration gains on record.
Significant Adjusted Gross Margin Improvement
The company improved its adjusted gross margin by 650 basis points year-over-year, reaching 46.5% for fiscal 2024, and exceeded its fiscal 2027 target three years early.
Expansion of Distribution and Capacity
Freshpet added over 1,300 new stores and 2,300 new fridges, with a total of 28,141 stores and 36,544 fridges by year-end 2024. The company also successfully started up new roll lines and plans to expand capacity further.
Positive Outlook for Fiscal Year 2025
The company expects net sales growth of 21% to 24% year-over-year for fiscal 2025, with adjusted EBITDA of at least $210 million, and is on track to achieve $1.8 billion in net sales by fiscal year 2027.
Lowlights
Challenges in Pet Specialty Channel
Freshpet plans to change its route to market and distribution partner in the pet specialty channel, which has underperformed in recent years.
Inventory Management Impact
Fourth quarter gross margin included a one-time benefit due to inventory build-up, which will negatively impact the first quarter of 2025 gross margin by 150 basis points.
Company Guidance
In the recent earnings call, Freshpet provided a comprehensive update on its fiscal year 2024 performance and guidance for 2025. The company reported net sales of $975 million, up 27% year-over-year, predominantly driven by volume growth and household penetration, with 2 million new households added. Adjusted gross margin saw a significant improvement, increasing by 650 basis points to 46.5% for the year. Freshpet achieved an adjusted EBITDA of $161.8 million, marking a 143% increase from the previous year. For 2025, Freshpet projects net sales of $1.18 billion to $1.21 billion, representing a 21% to 24% growth, and an adjusted EBITDA of at least $210 million. The company also expects capital expenditures of approximately $250 million, with plans to be free cash flow positive by 2026. Freshpet remains optimistic about its long-term growth, raising its 2027 margin targets to a 48% adjusted gross margin and a 22% adjusted EBITDA margin.Freshpet Corporate Events
Business Operations and StrategyFinancial Disclosures
Freshpet Reports Strong Financial Growth in 2024
Positive
Feb 20, 2025
Freshpet reported significant financial progress for the fourth quarter and full year 2024, with net sales increasing by 22% and 27.2% respectively, compared to the prior year. The company achieved positive net income for the first time, driven by improved gross margins and operational efficiencies. Freshpet also provided a positive outlook for 2025, projecting further sales growth and increased profitability, reflecting its strategic focus on transforming the pet food category and enhancing shareholder value.
Executive/Board Changes
Freshpet Announces 2025 Retention Grants for Executives
Neutral
Jan 8, 2025
Freshpet, Inc. has announced the approval of 2025 Retention Grants for three key executives, including the CEO, President and Co-Founder, and Chief Human Resources Officer, in the form of Restricted Stock Units (RSUs). The grants aim to retain these executives, deemed critical for the company’s value creation, and ensure future growth. These grants include both time-based and performance-based vesting conditions, with specific financial goals tied to the company’s net sales and Adjusted EBITDA margin over a three-year period, encouraging sustained performance and alignment with shareholder interests.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.