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NEW YORK (TheStreet) -- Shares of Treehouse Foods (THS) - Get TreeHouse Foods, Inc. Report are higher by 0.42% to $86 in pre-market trading on Monday morning, after the consumer packaged food and beverage manufacturing company announced it will acquire ConAgra Foods' (CAG) private brand business for $2.7 billion.

The transaction is designed to "meaningfully expand" Treehouse's presence in the private label dry and refrigerated grocery segments.

Once the purchase is completed, Treehouse will have pro forma sales of almost $7 billion and adjusted EBITDA of approximately $690 million.

"Since our founding 10 years ago, our strategy has been to drive shareholder value by consolidating supply of private label brands. We offer our customers value without compromise through economies of scale, quality products and superior customer service," Treehouse CEO Sam K. Reed said in a statement announcing the deal.

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The companies expect the acquisition to close in the first quarter of 2016.

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 robust revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share and compelling growth in net income. We feel its 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 greatly exceeded the industry average of 9.3%. Since the same quarter one year prior, revenues rose by 20.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $67.20 million or 41.39% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 2.76%.
  • TREEHOUSE FOODS INC has improved earnings per share by 26.3% 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 $2.20 versus $2.34 in the prior year. This year, the market expects an improvement in earnings ($3.08 versus $2.20).
  • The debt-to-equity ratio is somewhat low, currently at 0.75, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.76 is somewhat weak and could be cause for future problems.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Food Products industry average, but is greater than that of the S&P 500. The net income increased by 44.1% when compared to the same quarter one year prior, rising from $21.76 million to $31.36 million.
  • You can view the full analysis from the report here: THS