Freshpet (FRPT) shares surged Wednesday after the company delivered a second-quarter beat and raised its full-year outlook, driven by higher spending from its most valued consumers and volume growth.
The pet food company's net income rose to $0.39 a share in the June quarter from $0.33 a year earlier. Analysts in a FactSet-polled consensus expected $0.22. Net sales increased roughly 16% to $305.6 million, topping Wall Street's $292.3 million views.
"Amidst that volatile consumer backdrop, our consumer franchise remains healthy -- with an increasing share of our growth coming from increases in the buying rate of our consumers," Freshpet Chief Executive Billy Cyr said in prepared remarks. "This is a reflection of both our focus on the (most valuable purchasers) who spend (five times) more per year than the average household and account for 71% of our sales, and the tentative consumer backdrop."
Second-quarter sales growth was driven by a roughly 16% increase in volume, partially offset by unfavorable price/mix, Chief Financial Officer John O'Connor said.
The company's shares jumped 14% in late-afternoon trade. The stock has climbed 16% so far this year.
Freshpet increased its full-year net sales growth outlook to between 10% and 12% from its prior range of 8% to 11%. The company now expects 2026 adjusted earnings before interest, taxes, depreciation and amortization between $210 million and $220 million, up from its prior forecast of $205 million to $215 million.
"However, we have a tougher comp in (the third quarter) from the significant expansion in a large club customer and shift in ordering around the Fourth of July last year, which will impact our year-over-year growth by a little more than two points in the third quarter," O'Connor said. "We have also started to see total household penetration growth slow given increased inflationary pressure on consumers."
Regarding its fiscal 2027 targets, the company is confident in its ability to deliver net sales growth "well in excess" of the US dog food category growth, the CFO said.
Ahead of Freshpet's latest results, Oppenheimer said the company was "well positioned" to deliver on second-quarter Street projections and full-year financial targets.
"Management continues to execute well in sustaining momentum even with new entrants lately," the brokerage said in a note to clients July 28, adding that Freshpet remained a top pick.
Price: $70.71, Change: $+8.33, Percent Change: +13.35%
