TreeHouse Foods Slips 12% in 3 Months: What's Next for Investors?

TreeHouse Foods, Inc.'s THS stock has tumbled 12.3% over the past three months as it navigates a challenging environment marked by weaker consumer trends, slower category growth and operational disruptions.During this period, THS' stock has underperformed the broader industry, which saw a 3.8% decrease, as well as the Zacks Consumer Staples sector, which fell 2.7%. In contrast, the S&P 500 saw a 7.2% increase over the same timeframe.Let's take a closer look at the key factors negatively impacting TreeHouse Foods’ performance.Image Source: Zacks Investment ResearchWeak Consumption Trends Hurt TreeHouse FoodsTreeHouse Foods is facing the negative effects of slowing consumer consumption, as highlighted in its third-quarter 2024 performance, wherein the top line declined year over year and missed the Zacks Consensus Estimate. Quarterly net sales of $839.1 million dropped 2.8% and organic sales decreased 2.7%. The volume/mix contributed to a decline of 0.8%. The pricing and product recall returns further led to declines of 0.5% and 1.4%, respectively.Although private brand unit sales were positive during the third quarter, there was a notable deceleration as the quarter progressed. This reflects sustained consumer pressure and broad market challenges. The softness persisted into October, with expectations for these trends to continue in the near term. A shrinking market for private brands, despite their historical growth trajectory, raises concerns about TreeHouse Foods’ ability to sustain revenue growth.What’s on the Horizon for THS?Thanks to softer consumer demand and a voluntary recall of frozen griddle products, TreeHouse Foods recently lowered its 2024 adjusted net sales and adjusted EBITDA guidance. Management expects full-year adjusted net sales of $3.37-$3.4 billion, which indicates a decline of 2% to 1% from the reported level in 2023. This forecast is revised from the previous guidance of $3.43-$3.5 billion, implying a flat to a 2% increase. Adjusted net sales for the fourth quarter are projected to be between $900 million and $930 million, indicating a decline of 2% to 1% year over year.The company revised its 2024 adjusted EBITDA guidance downward in the range of $335-$345 million compared with $360-$380 million projected earlier in 2024. This revision implies weakening consumption trends and a softer mix, leading to supply chain deleverage, along with the anticipated impact of the voluntary griddle recall.Earnings Estimates for THS Take a HitTreeHouse Foods’ full-year earnings estimates are going down, and a similar trend could be noticed in its upcoming quarterly projections. Over the last 30 days, analysts have lowered their estimates for the fourth quarter and 2024 by 27.6% and 12.2% to 97 cents and $2.08 per share, respectively. This downward adjustment reflects a negative sentiment among analysts and suggests potential challenges in achieving growth.Investors Guide for TreeHouse FoodsThe company is facing a challenging period due to slowing consumer demand, weaker category growth and operational disruptions despite some positive sales in private brands. The company has revised its full-year guidance downward, reflecting a softer market outlook and the impact of a voluntary product recall. With expected declines in both net sales and EBITDA for 2024, investors should be cautious as THS navigates a difficult environment. At present, TreeHouse Foods carries a Zacks Rank #5 (Strong Sell).Some Solid Food BetsSprouts Farmers SFM, engaged in retailing fresh, natural and organic food products, currently sports a Zacks Rank #1 (Strong Buy). SFM has a trailing four-quarter earnings surprise of 15.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings implies growth of 12.2% and 29.6%, respectively, from the year-ago reported numbers.McCormick & Company MKC is a global food company that manufactures, markets and distributes spices, condiments, seasoning mixes and other flavoring products. It currently carries a Zacks Rank #2 (Buy). MKC has a trailing four-quarter earnings surprise of 13.8%, on average.The Zacks Consensus Estimate for McCormick & Company’s current financial-year sales and earnings suggests growth of around 0.6% and 8.2%, respectively, from the year-ago reported numbers.Freshpet FRPT, which manufactures, distributes and markets natural fresh meals and treats for dogs and cats, currently 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 implies growth of 27.3% and 224.3%, respectively, from the year-ago reported numbers.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Freshpet, Inc. (FRPT): Free Stock Analysis Report McCormick & Company, Incorporated (MKC): Free Stock Analysis Report TreeHouse Foods, Inc. (THS): Free Stock Analysis Report Sprouts Farmers Market, Inc. 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