Treehouse Foods (THS) Attains 52-Week High on Strong Q2


Shares of Treehouse Foods Inc (THS) reached a 52-week high of $83.42 on Sep 2 and eventually closed at $82.53. Shares have been gaining momentum since the company reported strong second quarter 2014 results and provided a favorable outlook for 2014.

Growth Driver

On Aug 7, this food manufacturer posted earnings per share of 84 cents in the second quarter of fiscal 2014 and beat the Zacks Consensus Estimate by a penny. Results also went up 29.2% from the year-ago level backed by higher sales and margins during the quarter.

Net sales went up 19.3% to $628.0 million backed by strong sales in all the segments. Sales benefited from the company’s private label strategy and varied portfolio of products and services. Sales, however, missed the Zacks Consensus Estimate by 2.4%.

Although cost of sales went up 18.1%, gross profit increased 23.8% year over year to $135.7 million due to higher sales, improved sales mix and operational efficiencies. Despite a 33% increase in operating expense, operating income went up 8.8% to $44.6 million.

Looking Ahead

Treehouse Foods raised its fiscal 2014 guidance to a range of $3.60 to $3.75 from $3.50 to $3.60. The increased guidance reflects benefits from the recently acquired Flagstone Foods and Protenergy Natural Foods companies.

The company acquired Protenergy Natural Foods for approximately $150 million (CAD $170 million), which was completed on May 30. Protenergy Natural Foods is an industry leading developer and manufacturer of premium quality food and beverage products. The acquisition added items such as soups, broths and gravies to TreeHouse's portfolio.

Again, in July, TreeHouse acquired Flagstone Foods — a Minneapolis-based distributor of dried fruits and nuts — from Gryphon Investors and other shareholders for $860 million in cash.

TreeHouse carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Some better-ranked stocks that are performing well in the food industry include Aramark (ARMK), Pinnacle Foods Inc. (PF) and J&J Snack Foods Corp. (JJSF). While Aramark sports a Zacks Rank #1 (Strong Buy), Pinnacle and J&J Snack Foods carry a Zacks Rank #2 (Buy).

Read the Full Research Report on PF
Read the Full Research Report on THS
Read the Full Research Report on ARMK
Read the Full Research Report on JJSF

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