IBD Stock Analysis
- Handle in 22-week double-bottom base shows 68.27 buy point.
Industry Group Ranking
* Not real-time data. All data shown was captured at
1:34PM EDT on
Freshpet (FRPT) is the IBD Stock Of The Day for Thursday. The healthy, fridge-fresh pet food-maker is trimming costs as it comes off a record sales year. FRPT stock zoomed 25% so far this year.
Secaucus, N.J.-based Freshpet was founded in 2006 and specializes in healthy refrigerated cat and dog food with fresh meat, fruits and vegetables rather than canned food. Company brands include Nature’s Fresh, Dog Nation and Dog Joy. Its products are sold at more than 25,281 retail stores and refrigerator locations across the United States and Europe.
Freshpet is coming off a record year, reporting its strongest top line growth since going public in 2014. Fiscal 2022 sales leapt 39.9% to $595.3 million, Freshpet reported in February. Freshpet averaged nearly 40% quarterly revenue growth last year, with sales accelerating the past two quarters.
Earnings are another story. The company reported quarterly losses since Q4 of 2020 as it faced high margins, production and logistics costs spurred by the coronavirus pandemic.
But Freshpet noted input, quality and logistics costs are showing strong improvement with its Q4 results. Meanwhile, the pet food maker says it is seeing greater market penetration and larger numbers of heavy buyers.
Freshpet also rolled out its Ennis Kitchen production plant last year, which will help improve scale and delivery times.
The company expects to announce Q1 earnings on May 1. FactSet forecasts Freshpet will report a flat year-over-year loss of 40 cents per share on a 26% spike in revenue to $166.7 million. For fiscal 2023, Freshpet guided to a 26% increase in net sales, to around $750 million. It anticipates adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of “at least” $50 million, which would more than double the $20.1 million reported for 2022.
Freshpet said it expects the first and second quarters will include “significant” transitory shipping costs as it moves inventory from Bethlehem, Pa., to Dallas, Texas, for its West Coast expansion.
Market Rally Stages Bullish Rebound; Big Bank Earnings Due
Freshpet shares jumped 4.65% Thursday to 66.22. The stock is trading in a 22-week long double-bottom base. However, the handle for the pattern gives FRPT stock a buy point of 68.27, slightly lower than the double-bottom entry indicated in MarketSmith. The current buy zone, which extends 5% beyond the buy point, stretches to 71.55.
FRPT stock is bouncing from its 50-day moving average and reclaimed its 10-day line on Thursday. A little more strength may offer investors an early entry opportunity.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
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