TreeHouse Foods, Inc. THS has concluded the previously announced (on Dec. 2, 2024) acquisition of Harris Tea for nearly $205 million, marking a strategic move to enhance its position in the private-label tea market. The acquisition was funded with cash on hand and is expected to be accretive to revenues and profitability beginning in 2025.
Strategic Benefits of THS’ Latest Acquisition
The acquisition of Harris Tea strategically leverages TreeHouse Foods' balance sheet strength, adding a fast-growing, high-margin business that enhances its leadership in the private-label tea sector. With Harris Tea’s expertise in tea sourcing, blending and packing, along with its established scale, industry knowledge and strong customer relationships, this acquisition aligns perfectly with TreeHouse Foods' long-term growth strategy.
As the transaction closes, TreeHouse Foods remains committed to its fiscal 2024 guidance, highlighting the expectation of continued improvement in volume growth and profit margins in fourth-quarter fiscal 2024.
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What’s More to Know About TreeHouse Foods?
Despite the promising acquisition, TreeHouse Foods has faced challenges recently. Over the past three months, the company’s stock has fallen by 13.2%, underperforming the industry’s decline of 8.3%. This slowdown is largely due to weak consumer trends, slower category growth and operational challenges. While the company saw positive private brand unit sales in the fiscal third quarter, growth has slowed, raising concerns about management’s ability to maintain momentum in a challenging market. At present, THS carries a Zacks Rank #5 (Strong Sell).
Despite these headwinds, the Harris Tea acquisition signals TreeHouse Foods' commitment to strengthening its market position in profitable sectors, laying the foundation for long-term success despite short-term challenges.
Some Solid Staple Bets
We have highlighted three better-ranked stocks from the Consumer Staples sector, namely United Natural Foods, Inc. UNFI, Ingredion Incorporated INGR and Freshpet FRPT.
United Natural currently sports a Zacks Rank of 1 (Strong Buy). UNFI delivered a trailing four-quarter earnings surprise of 553.1%, on average.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for United Natural’s current financial-year sales and earnings suggests growth of 0.3% and 442.9%, respectively, from the year-ago period’s reported figure.
Ingredion Incorporated manufactures and sells sweeteners, starches, nutrition ingredients and biomaterial solutions derived from wet milling and processing corn and other starch-based materials. The company currently carries a Zacks Rank #2 (Buy).
INGR has a trailing four-quarter earnings surprise of 9.5%, on average. The Zacks Consensus Estimate for Ingredion’s current financial year’s earnings indicates growth of 12.4% from the year-ago reported number.
Freshpet, a pet food company, presently carries a Zacks Rank #2. FRPT has a trailing four-quarter earnings surprise of 144.5%, on average.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings suggests growth of 27.2% and 228.6%, respectively, from the year-ago period’s reported figure.
Research Chief Names "Single Best Pick to Double"
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This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Freshpet, Inc. (FRPT) : Free Stock Analysis Report
United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report
TreeHouse Foods, Inc. (THS) : Free Stock Analysis Report
Ingredion Incorporated (INGR) : 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.
