Today's Dead Cat Bounce Stock Is Treehouse Foods (THS)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Treehouse Foods ( THS) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Treehouse Foods as such a stock due to the following factors:

  • THS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.5 million.
  • THS has traded 315,450 shares today.
  • THS is up 3.2% today.
  • THS was down 11.3% yesterday.

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More details on THS:

TreeHouse Foods, Inc. operates as a food and beverage manufacturer in the United States and Canada. It operates through North American Retail Grocery, Food Away From Home, and Industrial and Export segments. THS has a PE ratio of 36.8. Currently there are 8 analysts that rate Treehouse Foods a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Treehouse Foods has been 356,000 shares per day over the past 30 days. Treehouse has a market cap of $3.5 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.72 and a short float of 7.5% with 5.48 days to cover. Shares are down 4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Treehouse Foods as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, good cash flow from operations, increase in stock price during the past year and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 9.5%. Since the same quarter one year prior, revenues rose by 36.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 48.9% when compared to the same quarter one year prior, rising from $22.78 million to $33.92 million.
  • Net operating cash flow has increased to $135.00 million or 17.58% when compared to the same quarter last year. Despite an increase in cash flow, TREEHOUSE FOODS INC's cash flow growth rate is still lower than the industry average growth rate of 56.71%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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 27.9% 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 ($3.86 versus $2.20).

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