Zacks Investment Research Downgrades TreeHouse Foods (THS) to Strong Sell

TreeHouse Foods (NYSE:THS) was downgraded by Zacks Investment Research from a “hold” rating to a “strong sell” rating in a note issued to investors on Monday.

According to Zacks, “TreeHouse Foods, which has lagged the industry in a year, has been bearing the brunt of pricing pressure stemming from stiff competition in the grocery industry. This, along with commodity cost inflation and rising freight costs has been marring TreeHouse Foods’ DOI margin for a while now. This was reflected in fourth-quarter 2017 results, which marked the company’s third straight quarter of year-over-year earnings and sales decline. Apart from strained margins, results were hurt by the sale of SIF business. Unfortunately, management expects these hurdles to persist in 2018, which is evident from its drab view. Nonetheless, the company remains on track with TreeHouse 2020 plan that aims to boost operating margin by 300 bps by the end of 2020, through complete business integration and cost reduction. Also, TreeHouse completed a review of its SG&A and related costs and expects 2018 savings of roughly $30 million.”

THS has been the topic of several other research reports. Wolfe Research initiated coverage on shares of TreeHouse Foods in a report on Monday, December 4th. They issued a “market perform” rating on the stock. Citigroup dropped their target price on shares of TreeHouse Foods from $90.00 to $62.00 and set a “buy” rating on the stock in a report on Friday, November 3rd. Jefferies Group set a $100.00 target price on shares of TreeHouse Foods and gave the stock a “buy” rating in a report on Sunday, October 29th. TheStreet cut shares of TreeHouse Foods from a “c-” rating to a “d+” rating in a report on Friday, November 10th. Finally, Credit Suisse Group restated a “hold” rating and issued a $48.00 target price on shares of TreeHouse Foods in a report on Friday, February 9th. Three investment analysts have rated the stock with a sell rating, thirteen have assigned a hold rating and four have given a buy rating to the company’s stock. The company has a consensus rating of “Hold” and a consensus target price of $53.51.

Shares of TreeHouse Foods (THS) opened at $40.38 on Monday. TreeHouse Foods has a fifty-two week low of $36.35 and a fifty-two week high of $90.42. The company has a debt-to-equity ratio of 1.12, a current ratio of 2.48 and a quick ratio of 0.94. The stock has a market cap of $2,162.82, a P/E ratio of -8.06, a P/E/G ratio of 2.75 and a beta of 0.42.

TreeHouse Foods (NYSE:THS) last issued its earnings results on Thursday, February 15th. The company reported $1.02 earnings per share (EPS) for the quarter, topping the Thomson Reuters’ consensus estimate of $0.93 by $0.09. TreeHouse Foods had a negative net margin of 4.54% and a positive return on equity of 6.49%. The company had revenue of $1.70 billion for the quarter, compared to analysts’ expectations of $1.70 billion. During the same quarter last year, the company posted $1.14 earnings per share. The firm’s quarterly revenue was down 4.3% on a year-over-year basis. analysts expect that TreeHouse Foods will post 2.11 EPS for the current fiscal year.

TreeHouse Foods declared that its Board of Directors has authorized a stock buyback program on Thursday, November 2nd that allows the company to buyback $400.00 million in outstanding shares. This buyback authorization allows the company to reacquire shares of its stock through open market purchases. Stock buyback programs are often a sign that the company’s board of directors believes its stock is undervalued.

In other news, CEO Sam K. Reed sold 11,480 shares of the firm’s stock in a transaction on Monday, January 8th. The shares were sold at an average price of $49.72, for a total transaction of $570,785.60. Following the sale, the chief executive officer now directly owns 81,147 shares in the company, valued at approximately $4,034,628.84. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through the SEC website. Also, VP Thomas Emmet Oneill III sold 2,000 shares of the firm’s stock in a transaction on Tuesday, December 5th. The shares were sold at an average price of $45.32, for a total transaction of $90,640.00. Following the sale, the vice president now owns 135,019 shares in the company, valued at $6,119,061.08. The disclosure for this sale can be found here. Insiders have sold a total of 36,440 shares of company stock worth $1,680,850 in the last quarter. Corporate insiders own 3.50% of the company’s stock.

Several hedge funds have recently made changes to their positions in the company. Wells Fargo & Company MN raised its position in shares of TreeHouse Foods by 12.2% during the 3rd quarter. Wells Fargo & Company MN now owns 5,133,963 shares of the company’s stock valued at $347,723,000 after purchasing an additional 557,363 shares during the period. BlackRock Inc. raised its position in shares of TreeHouse Foods by 1.7% during the 4th quarter. BlackRock Inc. now owns 4,549,595 shares of the company’s stock valued at $225,024,000 after purchasing an additional 76,696 shares during the period. Levin Capital Strategies L.P. raised its position in shares of TreeHouse Foods by 69.0% during the 4th quarter. Levin Capital Strategies L.P. now owns 3,592,216 shares of the company’s stock valued at $177,671,000 after purchasing an additional 1,466,030 shares during the period. Victory Capital Management Inc. raised its position in shares of TreeHouse Foods by 616.9% during the 3rd quarter. Victory Capital Management Inc. now owns 3,273,871 shares of the company’s stock valued at $221,740,000 after purchasing an additional 2,817,230 shares during the period. Finally, Champlain Investment Partners LLC raised its position in shares of TreeHouse Foods by 6.2% during the 4th quarter. Champlain Investment Partners LLC now owns 3,135,190 shares of the company’s stock valued at $155,066,000 after purchasing an additional 182,965 shares during the period.

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TreeHouse Foods Company Profile

TreeHouse Foods, Inc is a consumer packaged food and beverage manufacturer. The Company’s segments include North American Retail Grocery, Food Away From Home, and Industrial and Export. The Company manufactures a range of shelf stable, refrigerated, fresh and frozen products. Its product categories include beverages, salad dressings, snack nuts, beverage enhancers, pickles, sauces, cereals, pasta and dry dinners, cookies and crackers, retail bakery, aseptic products, jams and other products.

Analyst Recommendations for TreeHouse Foods (NYSE:THS)

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