Why TreeHouse Foods Inc. Stock Popped Today

What happened

Shares of TreeHouse Foods Inc. (NYSE: THS) were surging today after the private-label food producer topped estimates in its fourth-quarter earnings report. As of 12:43 p.m. EST, the stock was up 12.8%.

So what

TreeHouse, which partners with Amazon.com and other mass-market retailers, said adjusted earnings per share improved from $1.08 a year ago to $1.14, beating estimates of $1.09. Revenue more than doubled to $1.8 billion, thanks to an acquisition of Conagra's private-label business a year ago, which beat expectations of $1.73 billion.

CEO Sam Reed summed up the quarter by saying: "Following a third quarter where we fell short on both internal and external expectations, we accomplished a great deal in the fourth quarter and are pleased with where we finished the year." Reed also noted a 2.9% increase in organic sales from TreeHouse's legacy business, and said that integration of Conagra private brands was progressing well. The company also reorganized into five divisions: baked goods, beverages, condiments, meals, and snacks.

Image source: TreeHouse Foods.

Now what

TreeHouse's guidance for 2017 was also better than expected, as the company sees revenue rising from $6.14 billion last year to a range of $6.4 billion to $6.6 billion, or an increase of 4% to 7%, which compares to the analyst consensus at $6.43 billion. It also sees gross margin improving from 18.2% last year to between 19.5% and 20.5%, and for EPS to increase from $2.95 to between $3.50 and $3.70. That was in line with analyst projections at $3.62.

2016 was a volatile year for TreeHouse stock, but the company seems to be on solid footing after the recent report, and profits should continue to improve as it integrates the Conagra acquisition.

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.