TreeHouse (THS) to Divest Lakeville Facility & Snack Bars Unit
TreeHouse Foods, Inc. THS recently entered into a deal with John B. Sanfilippo & Son, Inc. JBSS for divesting its Lakeville, MN, manufacturing facility and snack bars business. The transaction, valued at $63 million in cash, is expected to be completed within 30 days, subject to certain customary conditions.
TreeHouse Foods’ shares increased by 3.2% yesterday, eventually closing the trading session at $44.79.
Inside the Headlines
The Lakeville, MN, manufacturing facility is engaged in offering various private-label snack bar products, including fruit and grain, crunchy, chewy and protein bars. The facility was incorporated into TreeHouse Foods’ network when it acquired the Private Brands business in 2016. TreeHouse Foods anticipated the snack bars business to be incapable of contributing positive adjusted EBITDA in fiscal 2023.
The divestment is in sync with TreeHouse Foods’ strategy of restructuring its business portfolio and concentrating more on core businesses. The transaction will enable the company to better focus on and efficiently direct resources to its higher-margin private-label snacking and beverage categories, thus offering value to its shareholders.
It’s worth mentioning here that THS also divested a significant portion of its Meal Preparation business in October 2022. The divestiture well-positioned TreeHouse Foods to capitalize on solid demand trends and fuel growth across its higher-margin private-label snacking and beverage categories. Prior to this, it also concluded the sale of its Ready-to-eat Cereal business to Post Holdings in June 2021. These actions highlight the company’s focus on areas with higher growth potential and solidifying its balance sheet.
Zacks Rank and Price Performance
TreeHouse Foods, with a $2.5-billion market capitalization, currently carries a Zacks Rank #5 (Strong Sell). THS has been battling escalated costs for a while now. In the second quarter of 2023, although the gross margin expanded year over year, it continued to bear the brunt of additional costs associated with investments to improve the supply chain.
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The company’s shares have declined by 7.1% compared with the industry’s 3.5% decline recorded in the past six months.
A Couple of Solid Staple Bets
MGP Ingredients MGPI, which produces and markets ingredients and distillery products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MGP Ingredients’ current financial-year sales and earnings per share suggests growth of 5.8% and 10.4%, respectively, from the corresponding year-ago reported figures. MGPI has a trailing four-quarter earnings surprise of 18% on average.
Flowers Foods FLO emphasizes providing high-quality baked items. The company currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 2.3%.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales suggests growth of 6.7% from the year-ago period’s actuals. FLO has a trailing four-quarter earnings surprise of 7.6% on average.
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John B. Sanfilippo & Son, Inc. (JBSS): Free Stock Analysis Report
Flowers Foods, Inc. (FLO) : Free Stock Analysis Report
TreeHouse Foods, Inc. (THS) : Free Stock Analysis Report
MGP Ingredients, Inc. (MGPI) : Free Stock Analysis Report
