Freshpet, Inc.'s (NASDAQ:FRPT) Profit Outlook

By
Simply Wall St
Published
February 18, 2022
NasdaqGM:FRPT
Source: Shutterstock

We feel now is a pretty good time to analyse Freshpet, Inc.'s (NASDAQ:FRPT) business as it appears the company may be on the cusp of a considerable accomplishment. Freshpet, Inc. manufactures and markets natural fresh meals and treats for dogs and cats in the United States, Canada, and the United Kingdom. The company’s loss has recently broadened since it announced a US$3.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$24m, moving it further away from breakeven. The most pressing concern for investors is Freshpet's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Freshpet

Freshpet is bordering on breakeven, according to the 15 American Food analysts. They expect the company to post a final loss in 2022, before turning a profit of US$16m in 2023. Therefore, the company is expected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 75%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NasdaqGM:FRPT Earnings Per Share Growth February 18th 2022

Given this is a high-level overview, we won’t go into details of Freshpet's upcoming projects, but, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. Freshpet currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Freshpet to cover in one brief article, but the key fundamentals for the company can all be found in one place – Freshpet's company page on Simply Wall St. We've also compiled a list of key aspects you should further research:

  1. Historical Track Record: What has Freshpet's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Freshpet's board and the CEO’s background.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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