TreeHouse Foods (NYSE:THS) shares are down nearly 7% in the morning session today after the private-label food and beverage manufacturer announced a mixed set of third-quarter results. EPS of $0.57 fared better than estimates by $0.07. However, revenue of $863.3 million missed the cut by nearly $92 million despite a 3.6% year-over-year growth.
The company experienced 1% unit growth in its core retail business, despite the impact of a voluntary product recall and a supply chain disruption. However, its top line came in lower than expectations owing to weakness in co-manufacturing and food-away-from-home volume. Further, a 3.2% positive boost from pricing initiatives was offset by a 3.4% adverse impact from volume/mix during the quarter.
Nonetheless, the positive impact of pricing actions helped the company increase its adjusted EBITDA by $10.3 million over the year-ago quarter, reaching $89.9 million.
Looking ahead to Fiscal Year 2023, TreeHouse now expects adjusted net sales to be in the range of $3,435 million to $3,465 million. Adjusted EBITDA is anticipated to be between $360 million and $370 million.
For the upcoming quarter, TreeHouse expects adjusted net sales to be between $910 million and $940 million, which includes the impact of the voluntary product recall and supply chain disruption. Adjusted EBITDA for the quarter is expected to hover between $103 million and $113 million.
Is TreeHouse Foods a Buy, Sell, or a Hold?
Overall, the Street has a Moderate Buy consensus rating on Treehouse Foods. Following a 27% decline in TreeHouse shares over the past six months, the average THS price target of $50.86 implies a 29% potential upside in the stock.
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