TreeHouse Foods, Inc.NYSE
TreeHouse: On A Shaky Foundation
Darspal S Mann
Darspal S Mann
TreeHouse Foods: Money Tree?
Thu, Nov. 3, 12:00 PM
Thu, Nov. 3, 10:34 AM
- There is a lot going on with TreeeHouse Foods (NYSE:THS) in addition to the earnings and guidance updates which came in disappointing amid the growing pains of adding the ConAgra private-label business.
- The company is closing a plant in Canada and cutting back on capacity in Michigan.
- Also, CFO Dennis Riordan will take on the position of interim president to replace the departing Christopher Silva. Riordan announced his planned retirement earlier this year and will be replaced by Matthew Foulson.
- Susquehanna analyst Pablo Zuanic tries to make sense of the TreeHouse guidance cuts.
- "We are not ready to downgrade from Positive, but note our 2018 EPS was 10% below consensus ($4.93 vs. $5.42), so the downward draft could be hefty today. But big picture, we still think the guidance for 150bp of margin improvement at the CG PL unit is conservative (over the long term) given EBITDA margins there dropped to 8% from 13% (THS legacy is 12%) and that synergies in our view should be about 3pt."
- Previously: TreeHouse Foods misses by $0.08, misses on revenue (Nov. 3)
- Previously: TreeHouse Foods on watch after lowering profit guidance (Nov. 3)
- Shares of TreeHouse are down 20.24% to a 10-month low of $69.06.
Thu, Nov. 3, 9:07 AM
- TreeHouse Foods (NYSE:THS) lowers full-year profit guidance after a disappointing Q3 sales tally and concerns over Q4 private brands sales.
- "We do believe this is a short term situation," notes Sam Reed in a bit of rah-rah.
- The company expects Q4 EPS of $1.07-$1.12 (GAAP and adjusted) and full-year EPS of $2.80-$2.85 (adjusted) vs. $3.00-$3.10 prior..
- Previously: TreeHouse Foods misses by $0.08, misses on revenue (Nov. 3)
Thu, Nov. 3, 6:58 AM
Wed, Nov. 2, 5:30 PM
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Wed, Nov. 2, 9:18 AM
- Bryant VanCronkhite, lead manager of the $5 billion Wells Fargo Special Mid Cap Value fund (MUTF:WFPCX), aims to get an edge by buying companies with strong balance sheets, but only when Wall Street is mispricing their stock.
- Among the 60-odd holdings in his fund, he highlights private-label food maker TreeHouse Foods (NYSE:THS), communications outfit Harris (NYSE:HRS), fast-food chain Wendy’s (NYSE:WEN), transaction processor DST Systems (NYSE:DST), and set-top box maker Arris International (NASDAQ:ARRS).
- THS: He expects TreeHouse to throw off $500M-plus in free cash flow over the next five years from $213M last year. Says it's, “Wildly attractive in the consumer-staples space.”
- HRS: Became interesting when CEO Bill Brown took the helm in 2011. He bought rival Exelis for $4.6B and cleaned house. VanCronkhite expects the company’s more-concentrated portfolio of assets to produce higher levels of cash flow over the next three to five years. Notes that Jana Partners acquired two board seats in August, increasing the likelihood of even more value creation. At $89, its shares yield 2.4%.
- WEN: “Everyone knows Wendy’s products, but I don’t think the market prices in the way the business is run.” Management is on a “multiyear, multipronged” program to raise shareholder value, and has almost completed its move to a 95% franchise-owned model.
- DST: “DST rejuvenated their business model under a wealth and health platform.” Over the long term, he expects DST’s investments in technology to pay off. Expects FCF to more than double over the next five years.
- ARRS: The TV set-top-box maker’s customers are some of the biggest names in cable, such as Comcast and Charter Communications. And they’re incentivized to be good customers. “They have access to buy Arris stock at a specific price based on how much revenue they bring in. Says FCC fears are overblown.
- Source: Barron's
Mon, Oct. 31, 10:20 AM
- Susquehanna compares valuations on the food stocks in its coverage universe. The food stock check by the firm arrives after M&A activity has driven up share prices on many names.
- The list of food stocks still trading with a price-earnings ratio below 20 has narrowed to General Mills (NYSE:GIS), Hain Celestial (NASDAQ:HAIN), Kellogg (NYSE:K) and J.M. Smucker (NYSE:SJM).
- J.M. Smucker is the food stock that trades with the lowest PE in comparison to the sector average, while Hain Celestial trades the lowest compared to its historic average.
- TreeHouse Foods (NYSE:THS) has the most attractive adjusted EV/EBITDA mark (14.8X).
- General Mills and Kellogg have the most generous dividend yields, 3.0% and 2.8% respectively.
- Analyst Pablo Zuanic published the food stock update.
- Previously: Rally time for food stocks (Oct. 28)
Fri, Oct. 28, 12:30 PM
- Food stocks are in celebratory mood today after Hershey (HSY +6.6%) posted pleasing earnings results and Dean Foods is reported to be on the radar of Chinese beverage giant Hangzhou Wahaha Group.
- A lesser factor, but still a possible tailwind, was this morning's better-than-anticipated GDP print.
- Notable gainers include TreeHouse Foods (THS +1.2%), J M Smucker (SJM +2%), Post Holdings (POST +2%), Campbell Soup (CPB +2.5%), Pinnacle Foods (PF +1.6%), Hain Celestial (HAIN +1.3%), General Mills (GIS +1.6%) and Mondelez International (MDLZ +2.5%).
- The PowerShares Dynamic Food & Beverage ETF (NYSEARCA:PBJ) is up 1.12% to outpace broad market averages.
Mon, Aug. 8, 1:26 PM
- Susquehanna gives a brief update to investors on its four top food sector picks (all rated at Positive). Analyst Pablo Zuanic prefers companies with a North American focus.
- Kraft Heinz (KHC -0.7%): 3G is expected to have more tricks up its sleeve to improve the bottom line. "We see more accretive deal making," writes Zuanic.
- TreeHouse Foods (THS -1.5%): TreeHouse is seen benefiting from the integration of the ConAgra private label businesses and improving K-cup trends.
- Molson Coors (TAP -0.2%): EBIT margin has room to move higher after the inefficiencies of the JV structure with MillerCoors are behind it.
- Mondelez International (MDLZ +0.3%): Zuanic expects M&A action at MDLZ.
Thu, Aug. 4, 11:11 AM
- TreeHouse Foods (THS -5%) announces that CFO Dennis Riordan will transition to a senior advisor role upon the appointment of a successor.
- TreeHouse says it has initiated an executive search to identify a new CFO.
- The company reported Q2 earnings earlier today.
- Previously: TreeHouse Foods EPS in-line, misses on revenue (Aug. 4)
- Source: Press Release
Thu, Aug. 4, 8:03 AM
Wed, Aug. 3, 5:30 PM
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Wed, Aug. 3, 8:46 AM
- Susquehanna analyst Pablo Zuanic issues an earnings preview on four food stocks ahead of their reports.
- Kraft Heinz (NASDAQ:KHC): "We are taking our estimates ahead of the 2Q print as in hindsight our assumption for “only” $159M yoy EBITDA growth seems too conservative (consensus assumes +$328M yoy growth), and now expect $350M in EBITDA yoy growth. So our 2Q EPS is now 80c vs. 69c before (consensus is at 73c)."
- TreeHouse Foods (NYSE:THS): "We are 2c below consensus for 2Q16 (52c vs. 54c and guidance of 50-55c), and our full year EPS of $3.05 is below consensus of $3.07 and guidance of $3.05-$3.10. But we think the risks are more to the upside than downside, especially keeping in mind that 2Q guidance gave management a significant buffer (guidance implies 2H16 EPs being 2x 1H16)."
- Monster Beverage (NASDAQ:MNST): "Our 97c 2Q estimate is 6c below consensus, with 4c of the projected miss being top line related. According to the scanner data, Monster brands sales in the US continue to decelerate (+7% in 2Q16, 10% in 1Q16 and 4Q15, and low-teens 1Q-3Q15), and this should hurt sentiment."
- Kellogg (NYSE:K): "Although we project sales to decline at a worse pace in 2Q than 1Q, the stock may trade up as we see a 4c beat (1c on sales, 1c on EBIT margins), with sales slightly ahead of consensus, and good quality margin trends (accelerated gross margin gains, with greater reinvestment on turnaround efforts). We model 95c vs. consensus 91c."
- Zuanic has KHC and THS rated at Positive, while K and MNST are set at Neutral.
Mon, Jul. 11, 2:12 PM
- A bill requiring food companies to label GMO ingredients was approved by the U.S. Senate by a 63 to 30 vote and now heads to the House of Representatives.
- The negotiated bill requires food companies to label genetically modified food by a phrase, symbol on the package, or a bar code that can be scanned by smartphones.
- The Department of agriculture still has two years to write the precise labeling rules if the House approves the bill.
- The passage of the bill is seen as a positive for the food sector as the alternative of having to adhere to state-by-state rules could create operational chaos for national sellers.
- Food stocks: SENEA, SENEB, THS, OTCPK:NCRA, CPB, MDLZ, GIS, OTCPK:NSRGY, FLO, CAG, DF, SJM,DF, ANFI, JJSF, WWAV, UL, OTCQX:DANOY, OTCPK:PLATF, POST, K, PEP, DMND, PF, HAIN, KO, BETR, KHC, WILC, PPC, PF, LWAY, HRL, TSN, DTEA, SAFM, BRID.
Fri, Jun. 24, 11:05 AM
- Among consumer stocks covered by Susquehanna, the analysts say Mondelez (MDLZ -4.3%) and Coca-Cola European Partners (CCE -5.4%), along with Sodastream (SODA -2.7%), have the greatest earnings downside from a euro and pound that have gotten, well, pounded.
- The euro is currently down 2.3% against the dollar, while the pound is down 8.5%.
- "For those seeking to buy the dip, we would prefer MDLZ over CCE," the firm says, noting that 100% of CCE's revenues are exposed to those two currencies, it faces structural risks, and Coca-Cola's 48% ownership of CCE makes it an unlikely acquisition target.
- Acquisitive companies with U.S. dollar assets could go hunting in Europe, the analysts say, pointing to likely suitor Kraft Heinz (KHC -1.8%) -- a top pick for the firm, along with TreeHouse Foods (THS -0.6%) and Molson Coors (TAP -3.3%).
- Meanwhile, the possible ascendance of UKIP leader Nigel Farage in the UK or "anything that makes a Donald Trump presidency more likely" is bad for Mexico-heavy Constellation Brands (STZ -1.2%).
Fri, Jun. 17, 3:07 PM
- Susquehanna issued a detailed report on IRI scanner data trends in the food and beverage industry.
- The investment firm noted that soda drink volume fell 2.8% Y/Y for the 12-week period ending on June 5. PepsiCo (NYSE:PEP) volume was down 5%, compared to 1.3% decline for Coca-Cola KO and 1.9% fall-off for Dr. Pepper Snapple (NYSE:DPS).
- K-cup revenue was up 8% for the 12 weeks as J.M. Smucker (NYSE:SJM). Starbucks (NASDAQ:SBUX), and Dunkin' Brands (NASDAQ:DNKN) all showed strong volume amid ongoing pricing pressure. K-cup sales decelerated for Kraft Heinz (NASDAQ:KHC) and could turn negative if pricing pressure sustains.
- In the yogurt category, scanner data over four weeks confirmed that General Mills (NYSE:GIS) is losing market share to Chobani and Danone (OTCQX:DANOY). Susquehanna tips that Chobani may be prepping for a sale.
- General Mills beat out Kellogg (NYSE:K) in the cereal category as its 12-week sales growth of +2.3% easily topped Kellogg's 2.2% decline.
- Pricing with beer is helping to make up for continued volume pressure. Across the sector, pricing was recorded as 2.5% higher for the 12 weeks of data.
- Beer volume: Anheuser-Busch InBev (NYSE:BUD) -1.8%, MillerCoors (OTCPK:SBMRY, TAP) -2.7%, Boston Beer (NYSE:SAM) -2.1%.
- Susquehann'a Pablo Zuniac put together the deep dive into the scanned data.
- Within the F&B sector, he has BUD, THS, WWAV, TAP, and KHC rated at Positive.