Shares of TreeHouse Foods, Inc. (NYSE: THS) took a dive last month after the company posted a weak earnings report and lowered its guidance for the year. The packaged-food maker also said it would shut down two facilities, and announced a restructuring plan.
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Unsurprisingly, that news lopped 12% off the stock after the earnings report came out, and the stock continued to slide over the duration of the month, dropping 21%, according to data from S&P Global Market Intelligence.
It was an all-around stinker of a report for TreeHouse as revenue dipped 1.2% to $1.52 billion due to the previous sale of its soup and infant feeding business. That result missed the consensus at $1.54 billion. On the bottom line, adjusted earnings per share fell from $0.60 to $0.51, however, that actually beat estimates at $0.49.
Still, CEO Sam Reed acknowledged that the company's recover had been "slower than we originally anticipated," citing, "adverse market conditions, pricing lag from commodity cost increases and operating inefficiencies."
The news that the company would close two facilities and lay off about 400 employees also weighed on the stock. The move will result in a one-time charge of $44.5 million.
Finally, the company lowered its outlook as Reed noted, "The environment remains highly competitive, which is pressuring volumes across nearly all of our divisions." As a result, TreeHouse is now calling for adjusted EPS of $3.15 to $3.30, down from a previous range of $3.50 to $3.70.
TreeHouse has a history of having wild swings after earnings reports so investors shouldn't be surprised by the sell-off. However, with sales and earnings heading south, I wouldn't expect a turnaround so soon.
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