Shares of pet food company Freshpet(NASDAQ: FRPT) surged higher on Monday after the company reported completed financial results for 2023. As of 10:40 a.m. ET, Freshpet stock was up 19% and had hit new 52-week highs.
Business is booming for Freshpet
In the fourth quarter of 2023, Freshpet had net sales of $215 million, its highest ever and up 30% from the prior-year period. This was almost $12 million more than what management had expected. And the good news is that its growth was driven by a 25% increase in sales volume. In other words, more consumers are adopting the fresh pet food products.
Freshpet's sales were up and certain expenses -- including logistics expenses -- were down, leading to Q4 net income of $15.3 million. This was the company's first profitable quarter since 2020.
With sales surging and with the return of profitability, investors were rightly excited about Freshpet stock today.
Are better times still ahead?
Freshpet's management expects another record year in 2024. It believes that net sales will surge an additional 24% year over year to $950 million. It doesn't give guidance for net income. But for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), it expects at least $100 million. That would be a nice 50% increase from 2023.
Now trading at almost 7 times its trailing sales, Freshpet stock isn't cheap. But the business is growing profitably and it appears poised for future gains. Therefore, it could be worth it to pay a premium price for a high-quality growth stock such as this.
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Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Freshpet. The Motley Fool has a disclosure policy.
