Freshpet(FRPT) The Motley Fool·2025-02-20 19:50Core Viewpoint - Freshpet's stock experienced a significant decline despite a generally positive fourth-quarter earnings report, as the results did not meet high analyst expectations [2][5]. Financial Performance - Freshpet reported earnings of 262.71 million, falling short of the consensus expectations of 263.97 million [2]. - The company's sales increased by 22% in Q4, driven by a 17% rise in household penetration and an 18% increase in total distribution points [3]. - Adjusted gross profit margin improved from 41.1% to 48.1%, while adjusted EBITDA margin rose from 14.5% to 20% [4]. Future Outlook - Management anticipates sales growth between 21% and 24% in 2025 and expects to generate positive free cash flow by 2026, which would support growth without further shareholder dilution [4]. - The total outstanding share count has increased at an annualized rate of 6% over the past five years and is projected to rise again in 2028 due to a convertible bond offering, leading to further dilution [5]. Market Sentiment - Despite the positive aspects of Freshpet's business model and growth potential, the stock is perceived as overvalued, trading at approximately 56 times earnings even if net income margin were to double [5][6].