Have you been paying attention to shares of Freshpet (FRPT)? Shares have been on the move with the stock up 14.9% over the past month. The stock hit a new 52-week high of $160.91 in the previous session. Freshpet has gained 78.3% since the start of the year compared to the 5% move for the Zacks Consumer Staples sector and the -1.8% return for the Zacks Food - Miscellaneous industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 4, 2024, Freshpet reported EPS of $0.24 versus consensus estimate of $0.14 while it beat the consensus revenue estimate by 2.34%.
For the current fiscal year, Freshpet is expected to post earnings of $0.87 per share on $975.99 million in revenues. This represents a 224.29% change in EPS on a 27.26% change in revenues. For the next fiscal year, the company is expected to earn $1.47 per share on $1.21 billion in revenues. This represents a year-over-year change of 68.89% and 24.44%, respectively.
Valuation Metrics
Freshpet may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Freshpet has a Value Score of D. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 177.6X current fiscal year EPS estimates, which is a premium to the peer industry average of 18X. On a trailing cash flow basis, the stock currently trades at 257.6X versus its peer group's average of 10.7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Freshpet currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Freshpet passes the test. Thus, it seems as though Freshpet shares could still be poised for more gains ahead.
How Does FRPT Stack Up to the Competition?
Shares of FRPT have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Ingredion Incorporated (INGR). INGR has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of D.
Earnings were strong last quarter. Ingredion Incorporated beat our consensus estimate by 18.22%, and for the current fiscal year, INGR is expected to post earnings of $11.25 per share on revenue of $7.43 billion.
Shares of Ingredion Incorporated have gained 10% over the past month, and currently trade at a forward P/E of 13.99X and a P/CF of 11.37X.
The Food - Miscellaneous industry may rank in the bottom 61% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for FRPT and INGR, even beyond their own solid fundamental situation.
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Today, See These 5 Potential Home Runs >>Freshpet, Inc. (FRPT) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
