Why TreeHouse Foods Shares Climbed


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of food manufacturer TreeHouse Foods popped 11% today, after its fourth-quarter results impressed Wall Street.

So what: The stock was slammed last summer on concerns over sluggish sales and spiking input costs, but a wide fourth-quarter beat -- revenue of $592.8 million versus the consensus of $577.9 million -- reinforces recent optimism over management's recent initiatives. In fact, TreeHouse's North American Retail Grocery segment saw volume/mix growth of 8.7%, despite weak performance in the sector, giving investors plenty of good vibes about its competitive position going forward.

Now what: For 2013, management sees a net sales increase of 3.5%-4.5%, and expects gross margins to expand by up to 100 basis points. According to Chairman and CEO Sam Reed:

As we enter 2013, we believe we are better prepared despite challenges related to the economy, changing consumer shopping patterns, or the weather. We are maintaining our internal focus on lowering our cost to serve, but also escalating our efforts to find product adjacencies that will help drive incremental organic growth.

Of course, with the stock now up roughly 30% from its 52-week low, and trading at a 20-plus P/E, much of that growth might already be reflected in the price.

Interested in more info TreeHouse?Add it to your watchlist.

The article Why TreeHouse Foods Shares Climbed originally appeared on Fool.com.

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