TreeHouse Foods (THS) Gets a Hold Rating from Susquehanna

By Ryan Adsit

In a report released today, Pablo Zuanic from Susquehanna reiterated a Hold rating on TreeHouse Foods (THSResearch Report), with a price target of $49. The company’s shares opened today at $50.02.

Zuanic said:

“Given the business model (low margin private label business) and recent volatility, lack of FY19 guidance, and uncertainty about the eventual EBIT accretion of 300bp of gross cost savings between FY17 and FY20 (note EBIT in FY20 will fall by about ~$70Mn), it is hard for us to make a strong argument for the buy case of THS. Below we expand on key themes that may drive sentiment: 1) Post asset divestiture and SKU cuts, what will the sales base look like by FY20? 2) If PL is supposed to be on trend, why have total $ PL sales (as per the THS portfolio mix) slowed by about 3pt recently? 3) Overall price trends have improved lately (falling less), but remain down for most of the THS divisions or are only marginally up, well below what is need to pass of higher costs.”

According to TipRanks.com, Zuanic is a 4-star analyst with an average return of 4.3% and a 46.3% success rate. Zuanic covers the Consumer Goods sector, focusing on stocks such as Coca-Cola European Partners plc, Constellation Brands Inc, and Anheuser-Busch Inbev Sa.

TreeHouse Foods has an analyst consensus of Moderate Buy, with a price target consensus of $51.60.

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Based on TreeHouse Foods’ latest earnings release for the quarter ending September 30, the company reported a quarterly revenue of $1.39 billion and net profit of $5.4 million. In comparison, last year the company had a net profit of $28.8 million.

Based on the recent corporate insider activity of 28 insiders, corporate insider sentiment is negative on the stock.

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TreeHouse Foods, Inc. is a food manufacturer servicing primarily in retail grocery and foodservice channels. Its products include non dairy powdered creamers and sweeteners; condensed, ready to serve, and powdered soups; refrigerated and shelf stable salad dressings and sauces; powdered drink mixes; single serve hot beverages; specialty teas; hot and cold cereals; macaroni and cheese, skillet dinners and other value added side dishes and salads; salsa and Mexican sauces; jams and pie fillings; pickles and related products; aseptic sauces; and liquid non dairy creamer. The company operates through three business segments: North American Retail Grocery, Food Away From Home and Industrial and Export. The North American Retail Grocery segment sells branded and private label products to customers within the United States and Canada. These products include non-dairy powdered creamers, condensed and ready to serve soups, broths and gravies, salad dressings and sauces, pickles and related products, Mexican sauces, jams and pie fillings, aseptic products, liquid non-dairy creamer, powdered drinks, hot cereals, macaroni and cheese and skillet dinners. The Food Away From Home segment sells non-dairy powdered creamers pickles and related products, Mexican sauces, refrigerated dressings, aseptic products and hot cereals to foodservice customers, including restaurant chains and food distribution companies, within the United States and Canada. The Industrial and Export segment includes co pack business and non dairy powdered creamer sales to industrial customers for use in industrial applications, including products for repackaging in portion control packages and for use as ingredients by other food manufacturers, pickles and related products, Mexican sauces, infant feeding products and refrigerated dressings. Export sales are primarily to industrial customers outside of North America. The company was founded on January 25, 2005 and is headquartered in Oak Brook, IL.