TreeHouse Foods, Inc. THS is likely to register a top-and-bottom-line decline when it reports fourth-quarter 2023 earnings on Feb 16. The Zacks Consensus Estimate for revenues is pegged at $926.9 million, suggesting a decrease of 7% from the prior-year quarter’s reported figure.

The consensus mark for quarterly earnings has remained unchanged in the past 30 days at 71 cents per share, which indicates a decline of 27.6% from the year-ago quarter’s reported figure. THS has a trailing four-quarter earnings surprise of 26.5%, on average.

Factors to Consider

TreeHouse Foods has been battling escalated costs for a while now. In the third quarter of 2023, the gross margin declined 10 bps year over year, primarily due to supply-chain disruptions caused by a voluntary product recall, which resulted in a decrease in its gross profit. Also, adjusted net sales were adversely impacted by approximately $15 million due to a voluntary product recall and a discrete supply-chain disruption later in the quarter.

For the fourth quarter of 2023, revenues are projected in the band of $910-$940 million, implying a 3% year-over-year decline at the midpoint, primarily due to an anticipated decline from the voluntary product recall and supply-chain disruptions. The company expects adjusted EBITDA in the range of $103-$113 million for the fourth quarter, suggesting a 9% year-over-year decline at the midpoint.

TreeHouse Foods, Inc. Price, Consensus and EPS Surprise

TreeHouse Foods, Inc. price-consensus-eps-surprise-chart | TreeHouse Foods, Inc. Quote

Other than the abovementioned headwinds, temporary operating expenses, ranging from $5 million to $7 million, are expected from the planned wind-down of significant portions of the transition services agreement related to the Meal Preparation divestiture.

However, TreeHouse Foods’ actions to focus on greater-margin private-label snacking and beverage categories have been aiding. Efficient pricing efforts have also been working well for the company. Growth in third-quarter net sales was mainly driven by favorable pricing actions undertaken to recover commodity inflation. Pricing is likely to aid fourth-quarter results as well. Apart from this, the company has been actively pursuing margin improvement through TMOS and supply-chain initiatives.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for TreeHouse Foods this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

TreeHouse Foods has an Earnings ESP of 0.00%, while it carries a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.