The firm said it lowered its rating on the food manufacturer, which services the retail grocery and food-service distribution channels, based on its belief "that growth expectations for its private label single-serve beverage business are biased lower."
"Our work gives us increased confidence that TreeHouse Foods is losing share within the single-serve category to Keurig Green Mountain Inc. (GMCR) , as the latter converts retail accounts from non-licensed to licensed partners," Keybanc said.
Keybanc set a $70 price target on TreeHouse Foods, and lowered its full year 2015 earnings estimate to $4.08 per share, from $4.24 per share.
Separately, TheStreet Ratings team rates TREEHOUSE FOODS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate TREEHOUSE FOODS INC (THS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 0.8%. Since the same quarter one year prior, revenues rose by 19.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Food Products industry average. The net income increased by 17.2% when compared to the same quarter one year prior, going from $18.57 million to $21.76 million.
- Net operating cash flow has significantly increased by 263.99% to $47.52 million when compared to the same quarter last year. In addition, TREEHOUSE FOODS INC has also vastly surpassed the industry average cash flow growth rate of 3.68%.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- TREEHOUSE FOODS INC has improved earnings per share by 14.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TREEHOUSE FOODS INC reported lower earnings of $2.34 versus $2.39 in the prior year. This year, the market expects an improvement in earnings ($3.73 versus $2.34).
- You can view the full analysis from the report here: THS Ratings Report