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How Did TreeHouse Foods Perform in 1Q16?

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Price movement 

TreeHouse Foods (THS) has a market cap of $5.0 billion. It rose by 5.6% and closed at $90.39 per share on May 5, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 3.5%, 3.0%, and 15.2%, respectively, as of the same day. This means that TreeHouse Foods is trading 2.8% above its 20-day moving average, 4.6% above its 50-day moving average, and 10.2% above its 200-day moving average.

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Related ETF and peers

The iShares Morningstar Small Core ETF (JKJ) invests 0.67% of its holdings in TreeHouse Foods. JKJ tracks a market-cap-weighted index of US small-cap core stocks. The index selects stocks from 90%–97% of the market cap that fall into Morningstar’s core style categorization. JKJ’s YTD price movement was 3.3% as of May 5, 2016.

The market caps of TreeHouse Foods’ competitors are as follows:

  • B&G Foods (BGS) – $2.2 billion
  • J.M. Smucker (SJM) – $15.5 billion
  • Post Holdings (POST) – $4.5 billion

Performance in fiscal 1Q16

TreeHouse Foods reported fiscal 1Q16 net sales of $1.3 billion—a rise of 62.2% compared to net sales of $7.8 billion in fiscal 1Q15. Sales from the North American retail grocery, food away from home, and industrial and export segments rose by 72.1%, 27.5%, and 34.9%, respectively, in fiscal 1Q16—compared to fiscal 1Q15. The company’s cost of sales as a percentage of net sales rose by 2.5% and its operating income fell by 59.5% in fiscal 1Q16—compared to the same period last year. It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $1.25 billion in fiscal 1Q16—a rise of 48.2% compared to fiscal 1Q15.

Its net income and EPS (earnings per share) fell to -$3.3 million and -$0.06, respectively, in fiscal 1Q16—compared to $17.9 million and $0.41, respectively, in fiscal 1Q15. It reported adjusted EPS of $0.48 in fiscal 1Q16—a fall of 18.6% compared to fiscal 1Q15.

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Projections

The company expects adjusted EPS of $0.50–$0.55 per share for fiscal 2Q16.

It also expects adjusted EPS of $3.00–$3.10 per share for fiscal 2016.

TreeHouse recalled products to avoid illness

In a press release on May 3, 2016, the company stated that “TreeHouse has voluntary recalled 100 of its products that may be impacted by sunflower seeds contaminated with Listeria monocytogenes (L.mono).”

“L.mono is an organism, which can cause serious and sometimes fatal infections in young children, frail or elderly people, and others with weakened immune systems. Listeria infection can cause miscarriages and stillbirths among pregnant women.”

The company took this initiative to protect the public’s health. It’s also working with the FDA to investigate the problem.

In the next part, we’ll discuss Church & Dwight Company.

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