Skip to Content

Treehouse Foods Inc THS

Morningstar Rating
$35.76 −0.19 (0.53%)
View Full Chart
Unlock our analysis with Morningstar Investor

Company Report

Pure-Play Exposure to Private Label Should Drive Growth for TreeHouse, but Precludes a Moat

Private-label manufacturers can offer customers lower prices by minimizing the marketing and product spending that most packaged-food companies rely on to create strong brands. Secular trends create tailwinds for growth, but preferences for private label differ greatly by category. Since Steve Oakland took over as CEO in 2018, TreeHouse has slimmed its portfolio. We think this strategy makes sense, as TreeHouse is now more focused on categories where growth and private-label penetration are higher, including snacking, beverages and drink mixes, and aseptic goods. This is reflected in our mid-single-digit top-line growth forecast that exceeds most CPG companies we cover, but we think low operating margins are unlikely to improve given the lack of a moat.

Price vs Fair Value

THS is trading at a 58% premium.
Price
$35.76
Fair Value
$37.00
Uncertainty
High
1-Star Price
$21.20
5-Star Price
$42.20
Economic Moat
Kfbgl
Capital Allocation
Fcwwgwkyj

Bulls Say, Bears Say

Bulls

The continued store expansion of grocers with high private-brand penetration like Trader Joe’s, Costco, and Aldi should provide a tailwind for industry growth.

Bears

With just one third of sales coming from multiyear contracts and the lack of switching costs in the industry, TreeHouse faces significant potential volatility to the top line.

Is it the right time to buy, sell, or hold?
Start a free trial of Morningstar Investor to unlock exclusive ratings and continuous analyst coverage to help you decide if THS is a good fit for your portfolio.

News

Trading Information

Previous Close Price
$35.95
Day Range
$35.4936.18
52-Week Range
$33.2853.28
Bid/Ask
$30.02 / $37.35
Market Cap
$1.88 Bil
Volume/Avg
328,021 / 460,107

Key Statistics

Price/Earnings (Normalized)
20.73
Price/Sales
0.58
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
5.32%

Company Profile

TreeHouse Foods is the largest pure-play private-label manufacturer in the US. Much larger in the past following the 2016 acquisition of Ralcorp, Conagra’s former private-label business, the company has since divested several businesses to focus on high-growth categories. At present, the company produces and sells snacks (crackers, pretzels, cookies, and so on), beverages and drink mixes (such as nondairy creamer, coffee, tea), and a select number of grocery products (pickles, refrigerated dough, hot cereal, cheese, and pudding). Its most important sales channel is through retail grocery stores that sell its products under their own brands, with co-manufacturing and food away from home as much smaller channels of distribution for its fare.
Sector
Consumer Defensive
Industry
Packaged Foods
Stock Style Box
Small Value
Total Number of Employees
7,400

Competitors

Valuation

Metric
THS
CAG
GIS
Price/Earnings (Normalized)
20.7310.7014.40
Price/Book Value
1.181.503.99
Price/Sales
0.581.141.94
Price/Cash Flow
9.367.4311.95
Price/Earnings
THS
CAG
GIS

Financial Strength

Metric
THS
CAG
GIS
Quick Ratio
0.580.290.33
Current Ratio
1.520.950.66
Interest Coverage
1.143.357.70
Quick Ratio
THS
CAG
GIS

Profitability

Metric
THS
CAG
GIS
Return on Assets (Normalized)
2.31%5.79%8.71%
Return on Equity (Normalized)
5.78%14.39%27.32%
Return on Invested Capital (Normalized)
3.78%8.83%13.78%
Return on Assets
THS
CAG
GIS
See how this stock stacks up to its competitors with Morningstar Investor

Packaged Foods Industry Comparables

1-Day Chart
Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
Nestle SA ADR
NSRGY
XvwwvvjkvPkmbn$279.9 Bil
Danone SA ADR
DANOY
KmhpqmpnTczfz$40.7 Bil
The Kraft Heinz Co
KHC
GwrmbjrwgNlrmty$39.7 Bil
General Mills Inc
GIS
McdygcyhgyHhqmt$37.6 Bil
Kellanova Co
K
LtbmklqqBmssxjl$20.1 Bil
McCormick & Co Inc Registered Shs Non Vtg
MKC
NlmqsvtgMnmv$18.4 Bil
Hormel Foods Corp
HRL
KtzxqbtywpKvddk$16.7 Bil
Conagra Brands Inc
CAG
CltngbpdyHqsj$13.7 Bil
Campbell Soup Co
CPB
HgvjxxrBckd$13.4 Bil
Lamb Weston Holdings Inc
LW
BdrmqjmvsXzbzgvn$12.2 Bil

Sponsor Center