What Happened:

Shares of pet food company Freshpet (NASDAQ:FRPT) jumped 14.1% in the pre-market session after the company reported first-quarter results that beat analysts' revenue, operating margin, and EPS expectations. That the company reiterated its full year guidance shows that it is squarely on track. The topline benefitted from volume gains, while profitability was boosted by improved gross margin, reduced logistics costs as a percentage of net sales, and a gain on equity investment of $9.9 million. Overall, we think this was a really good quarter that should please shareholders.

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What is the market telling us:

Freshpet's shares are somewhat volatile and over the last year have had 8 moves greater than 5%. But moves this big are very rare even for Freshpet and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 2 months ago, when the stock gained 18% on the news that the company reported fourth-quarter results that blew past analysts' EPS expectations. Its revenue also outperformed Wall Street's estimates as it saw momentum in the pet food sector. Notably, 2023 marked the sixth consecutive year of robust revenue growth, consistently exceeding 25%. Looking ahead, management's EBITDA guidance of $105 million for the full year 2024 came in ahead of expectations, and it noted the company reached an inflection point this quarter in terms of profitability. Overall, this was a really good quarter that should please shareholders.

Freshpet is up 34.6% since the beginning of the year. Investors who bought $1,000 worth of Freshpet's shares 5 years ago would now be looking at an investment worth $2,562.

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