What Happened?
Shares of private label food company TreeHouse Foods (NYSE: THS) fell 1.3% in the afternoon session after peer Hormel Foods reported disappointing third-quarter results and lowered its full-year earnings forecast.
Hormel, a major player in the industry, announced that while its sales grew, its earnings were disappointing and fell short of expectations. The company cited a "steep rise in commodity input costs" as the primary reason for the shortfall. Consequently, Hormel reduced its annual operating income forecast from a range of $1.12bn-$1.19bn to $982m-$996m. This negative news from a peer company is likely weighing on TreeHouse Foods, as investors may be concerned that it faces similar inflationary pressures that could hurt its profitability.
The shares closed the day at $18.14, down 0.8% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy TreeHouse Foods? Access our full analysis report here, it’s free.
What Is The Market Telling Us
TreeHouse Foods’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock gained 10.8% on the news that Federal Reserve Chair Jerome Powell hinted at the possibility of future interest rate cuts in a widely anticipated speech. Powell's remarks to the annual central banking symposium at Jackson Hole acknowledged a "shifting balance of risks," noting growing risks to the job market. While he stopped short of a firm commitment, his comments were interpreted by investors as opening the door to lowering interest rates in the coming months. This signal spurred a significant rally across the broader U.S. stock markets, with the S&P 500, Nasdaq, and Dow Jones Industrial Average all surging higher.
TreeHouse Foods is down 48% since the beginning of the year, and at $18.13 per share, it is trading 58.1% below its 52-week high of $43.22 from September 2024. Investors who bought $1,000 worth of TreeHouse Foods’s shares 5 years ago would now be looking at an investment worth $420.94.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
