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Why Did TreeHouse Foods Recall Some of Its Products?

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Price movement

TreeHouse Foods (THS) has a market cap of $4.1 billion. It rose 0.71% to close at $72.33 per share on December 13, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 3.6%, 14.2%, and -7.8%, respectively, on the same day.

THS is trading 4.7% above its 20-day moving average, 6.5% below its 50-day moving average, and 18.7% below its 200-day moving average.

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Related ETF and peers

The Vanguard S&P Mid-Cap 400 Growth ETF (IVOG) invests 0.40% of its holdings in TreeHouse Foods. The YTD price movement of IVOG was 15.6% on December 13.

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

  • J.M. Smucker (SJM) — $15.0 billion
  • Post Holdings (POST) — $5.0 billion
  • B&G Foods (BGS) — $2.9 billion

Latest news on TreeHouse Foods

Reuters reported on December 11, 2016, “Packaged foods maker TreeHouse Foods Inc on Sunday recalled certain macaroni and cheese cup products containing cheddar cheese seasoning, saying they may be contaminated with salmonella. The company said no illnesses had been reported and that the products had been distributed nationwide through retail stores.”

The report added, “Products being recalled are Big Win Original Macaroni & Cheese Dinner, Cheese Club Express Mac Macaroni & Cheese Dinner and Great Value Macaroni & Cheese Original Cups.”

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Performance of TreeHouse Foods in 3Q16

TreeHouse Foods (THS) reported 3Q16 net sales of $1.6 billion, a rise of 98.7% compared to net sales of $798.6 million in 3Q15. Sales from North American Retail Grocery, Food Away from Home, and Industrial and Export segments rose 118.5%, 66.4%, and 16.2%, respectively, in 3Q16 compared to 3Q15.

The company’s gross profit margin and operating margin fell 190 basis points and 290 basis points, respectively, in 3Q16 compared to 3Q15. It reported adjusted EBITDA[1. earnings before interest, tax, depreciation, and amortization] of $169.5 million in 3Q16, a rise of 69.8% compared to 3Q15.

Its net income rose to $37.2 million in 3Q16 compared to $28.4 million in 3Q15. It reported EPS (earnings per share) of $0.65 in 3Q16 and 3Q15. It reported adjusted EPS of $0.70 in 3Q16, a fall of 18.6% compared to 3Q15.

Projections

TreeHouse Foods (THS) expects adjusted EPS in the range of $1.07–$1.12 per share for fiscal 4Q16. It expects adjusted EPS in the range of $2.80–$2.85 per share for fiscal 2016.

Next, we’ll discuss Bemis Company (BMS).

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