Shares of pet food company Freshpet (NASDAQ: FRPT) soared on Monday after the company reported financial results for the third quarter of 2024. The report was strong, and management raised guidance. This sent Freshpet stock up 15% as of 2:50 p.m. ET, allowing it to reach 52-week highs.
Freshpet is growing and profitable
In Q3, Freshpet grew net sales by 26% year over year to $253 million. And management shared an extraordinary statistic: Q3 marked the 25th consecutive quarter of at least 25% top-line growth. The rate that this business has compounded is simply hard to believe.
It's been good for shareholders. Freshpet's fresh pet food products have a shorter shelf life than traditional pet food options. This means that manufacturing and distribution is important with this business. And its big infrastructure clearly benefits from scale.
For evidence, consider that Freshpet's Q3 gross margin jumped to 40%, compared with just 33% in the prior-year period. And cash flow has improved as well. Through the first three quarters of 2024, the company's cash from operations of $104 million is vastly improved from $39 million for the comparable period of 2023.
With improvements such as these, it's no wonder that Freshpet stock was up today.
The outlook is bright for Freshpet
Freshpet's management modestly raised its full-year net-sales guidance from $965 million up to $975 million. Its guidance for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), as well as guidance for capital expenditures, were more notable. Management boosted guidance for adjusted EBITDA from at least $140 million to at least $155 million. But it also lowered its guidance for capital expenditures from $200 million down to $180 million.
In other words, Freshpet's expects to keep growing, keep profiting, and get more efficient with its plans to invest back in its business. That could be a good recipe for long-term shareholders from here.
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Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Freshpet. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
