What Happened?

Shares of private label food company TreeHouse Foods (NYSE:THS) fell 17.3% in the morning session after the company reported weak third-quarter results that missed across key operating metrics we track. Revenue and EBITDA fell below Wall Street's expectations, and the company also reported underwhelming earnings per share, which came in roughly in line. 

Management called out a tough operating environment with softer consumer demand. In addition, the company discovered potential contamination during routine product testing and initiated a recall of the affected products (frozen griddle). The recall is likely to affect volumes during the next quarter, translating to weaker sales. 

As a result, the company provided weak sales guidance for the next quarter, which was below consensus estimates. Overall, this was a challenging quarter, highlighting new issues that the company has to deal with, at least in the short term.

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What The Market Is Telling Us

TreeHouse Foods’s shares are not very volatile and have only had 2 moves greater than 5% over the last year. Moves this big are rare for TreeHouse Foods and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 9 months ago when the stock dropped 14.8% on the news that the company reported fourth-quarter results, with organic revenue coming in weak and below expectation. The company highlighted a "difficult consumer environment in the food and beverage industry." Also, its revenue and adjusted EBITDA guidance for the next year both missed analysts' expectations. Management expects growth in the first half of the year to be impacted by weakness in the broth business. Overall, the results could have been better.

TreeHouse Foods is down 26.8% since the beginning of the year, and at $30.98 per share, it is trading 28.8% below its 52-week high of $43.49 from February 2024. Investors who bought $1,000 worth of TreeHouse Foods’s shares 5 years ago would now be looking at an investment worth $633.74.

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