TreeHouse Foods' (THS) Latest Acquisition Move to Aid Growth
TreeHouse Foods, Inc. THS is focused on expanding its product offerings through acquisitions. The leading private-label food and beverage manufacturer entered into an agreement to purchase The J.M. Smucker Co.’s SJM Bick's pickles, Habitant pickled beets, Woodman's horseradish and McLarens pickled onions brands.
The deal is priced at roughly $20 million. Management expects to conclude the transaction in the fourth quarter of 2023. The to-be-acquired brands delivered almost $60 million net sales for The J.M. Smucker Co. in fiscal 2023.
The acquisition is in sync with TreeHouse Foods’ growth strategy. The move will enable the company to increase its presence in the growing pickles category and expand across Canada.
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Focus on Refining Portfolio
The Zacks Rank #3 (Hold) company has been undertaking acquisitions to drive growth. In June 2023, THS acquired Farmer Brothers Company's Northlake, TX, coffee facility and non-Direct Store Delivery coffee business (known as Direct Ship). This acquisition solidifies the company’s position as a leading player in the private-label snacking and beverage industry while propelling its presence in the coffee sector. In April 2023, TreeHouse Foods added seasoned pretzel capabilities to its portfolio. In December 2020, the company acquired the majority of Riviana Foods’ U.S.-branded pasta portfolio.
On the flip side, management remains committed to exiting underperforming businesses and shifting focus toward areas with high growth potential. On Oct 3, 2022, TreeHouse Foods concluded the sale of a significant portion of its Meal Preparation business, which included pasta, pourable and spoonable dressing, preserves, red sauces, syrup, dry blends and baking, dry dinners, pie filling, pita chips and other sauces. The divestiture placed TreeHouse Foods well to capitalize on solid demand trends and fuel growth across its higher-margin private-label snacking and beverage categories.
Wrapping Up
TreeHouse Foods has been battling escalated costs for a while now. Although the supply-chain scenario has been improving, a few categories still have scope for enhancement. THS’s stock has lost 16.8% in the past three months compared with the industry’s decline of 17.6%.
The purchase of pickle-branded assets from The J. M. Smucker will add another leaf to TreeHouse Foods’ growth story.
Some Solid Picks
Post Holdings POST, a consumer-packaged goods holding company, currently sports a Zacks Rank #1 (Strong Buy). POST has a trailing four-quarter earnings surprise of 59.6% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Post Holdings’ current fiscal year sales and earnings suggests growth of 13.2% and 189.3%, respectively, from the corresponding year-ago reported figures.
The Kraft Heinz Company KHC, a food and beverage product company, currently carries a Zacks Rank #2 (Buy). KHC has a trailing four-quarter earnings surprise of 11.3% on average.
The Zacks Consensus Estimate for Kraft Heinz’s current fiscal year sales suggests growth of 2.2% from the corresponding year-ago reported figure.
The J. M. Smucker Company, which manufactures and markets branded food and beverage products, currently carries a Zacks Rank of 2. SJM has a trailing four-quarter earnings surprise of 7.3%, on average.
The Zacks Consensus Estimate for The J. M. Smucker’s current financial year earnings suggests growth of 8.9% from the year-ago reported figure.
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The J. M. Smucker Company (SJM) : Free Stock Analysis Report
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