Why Freshpet Stock Leapt 24% Higher in May

Core Viewpoint - Freshpet's strong Q1 earnings report has driven its stock price up significantly, indicating a potential recovery in the pet food industry after a prolonged slump [2][3]. Company Performance - Freshpet's revenue for Q1 increased by 33.6% to $223.8 million, surpassing estimates of $216.4 million [3]. - The company's gross margin improved from 30.3% to 39.4%, attributed to lower input, quality, and logistics costs [3]. - Adjusted EBITDA rose dramatically from $3 million to $30.6 million, and the company turned a GAAP per-share loss of $0.52 into a profit of $0.37, exceeding the consensus estimate of a loss of $0.23 per share [3]. Market Reaction - Following the earnings report, Freshpet's stock rose 24% in May, reflecting positive investor sentiment and a broader rally in pet stocks [2][4]. - Analysts on Wall Street provided favorable commentary, contributing to the stock's upward momentum, alongside gains from competitors like Petco and Chewy [4]. Future Outlook - Freshpet reaffirmed its revenue guidance of at least $950 million, indicating a minimum growth of 24%, and raised its adjusted EBITDA expectations from $100 million to at least $120 million [5]. - The company's current price-to-sales ratio is around 7, and it trades at approximately 50 times EBITDA, which is considered reasonable given its growth rate [5].