The market value of pet food company Freshpet (FRPT) suddenly jumped by nearly 20% since the beginning of the week. The reason was that Freshpet substantially improveв its profitability, according to its latest quarterly earnings report. Its EPS (equity per share) of $0.31 on revenue of more than $215 million far exceeded $0.08 of consensus expectations on $204.33 million of revenue, especially as it took place after twelve consecutive quarters of loss-making. It looks like the six years with greater than 25% growth in terms of sales volume ultimately bore fruits, giving a solid portion of new hope to shareholders. Revenue numbers amounted to $65.75 in February 2020 and added another impressive 30% for the last year.

"We believe Freshpet has reached an inflection point on its journey toward becoming not only a sizable but profitable business," the company's CEO Billy Cyr commented. He added that Freshpet delivered the strong growth investors came to expect from its business development, being on the way "toward delivering the kind of profitability and cash flow one would expect of a market leader". Since 2017, the manufacturer has mostly used a "Feed the Growth strategy" for scaling the business first before most of rivals entered the fresh pet food market, yet later it proclaimed a transition to an approach meaning that it has already achieved sufficient scale to focus more directly on profitability. Now it feels a "significant opportunity to drive further profit improvement". A strong advertising presence and household penetration is going to provide better results in nearest quarters. Logistics costs reportedly decreased to 6.3% of net sales from 9.4% in 2022 and 6.8% in Q3 2022, which strengthened the foundation for higher estimates for 2024.

A record 5,251 fridge placements in 2023 brought Freshpet to a total of 34,274 fridges at retail, as of December 31, 2023, so that its production now could be found in 26,777 stores, which is a great expansion. Besides, its digital business for order on a phone or desktop, including purchases through Amazon and customers' pick-up options, increased 58% YoY. Projections show this digital segment is going to exceed $100 million in 2024. According to NielsenIQ, the total pet food market is estimated as a $52 billion category, including a $36 billion dog food category, while Freshpet just occupied a 3% market share, leaving a vast window of opportunities.

Freshpet is an American company, founded in 2006 and went public on the Nasdaq exchange in 2014. Its products for cats and dogs are marketed as fresh and healthy, having no preservatives and need to be kept refrigerated. It was a good growth story during the two corona pandemic years of 2020-2021 when the Freshpet's business assessment by Wall Street crowds has tripled at some moment. This was followed by a lasting period of price correction, so that Freshpet share price turned into the next recovery stage only in the last Christmas season of 2023. Nevertheless, one could easily calculate that investors who bought a $1,000 worth stake in Freshpet about five years ago would still now have an investment worth more than $2,800. Yet, Freshpet is trading at a 40% discount when compared to its peaking price of May 2021, while its current financial indicators may leave enough room for further revival.