Freshpet Earnings: Share Price Spikes on Strong but Unsurprising First Quarter; Shares Overvalued

No-moat Freshpet’s fresh product continued to resonate with consumers, leading to robust top-line growth and margin expansion in its first quarter. Net sales grew 34% over the prior year to $224 million. Margin expanded 1,190 basis points to 13.7%; adjusted EBITDA of $30.6 million was 10 times higher than a year ago. Still, these results were only slightly better than what the company guided to, as it maintained its full-year sales outlook of $950 million and ticked up its adjusted EBITDA guidance to $120 million, up from $100 million to $110 million. We expect to raise our $85 per share fair value estimate by a low-single-digit percentage on higher near-term profits. Shares were up 10% on the results, leaving them well above our fair value estimate.