Freshpet Stock Up 5% After Reporting Q4 Earnings Beat Estimates

Freshpet, Inc. FRPT delivered fourth-quarter 2025 results, with the top line missing the Zacks Consensus Estimate while the bottom line surpassing the same. Both metrics showed year-over-year growth.

In the fourth quarter, Freshpet delivered a resilient performance despite ongoing macroeconomic headwinds, continuing to outpace the broader pet food category and gain market share. Growth was supported by solid volume trends, expanded distribution—particularly in club and omnichannel channels—and more effective, digitally focused advertising.

Operational discipline and manufacturing efficiencies helped sustain margin stability, reinforcing confidence in the company’s long-term model. Reflecting investor optimism around the results and outlook, shares of FRPT gained approximately 5.5% yesterday following the earnings release.

Freshpet’s Quarterly Performance: Key Insights

FRPT reported a quarterly earnings of 64 cents per share, beating the Zacks Consensus Estimate of 43 cents per share. This compares to earnings of 36 cents per share a year ago.

Freshpet, Inc. Price, Consensus and EPS Surprise

Freshpet, Inc. price-consensus-eps-surprise-chart | Freshpet, Inc. Quote

Net sales were $285.2 million, rising 8.6% year over year, which came slightly below the Zacks Consensus Estimate of $286 million. The revenue growth was mainly supported by 9.7% growth in volumes, while partially offset by 1.1% impact from an unfavorable price mix.

The company delivered broad-based consumption growth across multiple channels during the fourth quarter. Total U.S. pet retail plus channels, including Costco, recorded strong growth of 9.4% year over year, while total U.S. pet retail plus grew 8.5% year over year. Momentum remained solid in XAOC, which posted 9% growth, underscoring continued strength in alternative and emerging channels. U.S. food consumption increased 5.8% year over year, while the pet specialty channel delivered more modest growth of 1% year over year. In addition, the e-commerce reached 14.6% of sales in the fourth quarter.

Freshpet’s Margin & Cost Details

The adjusted gross profit margin increased to 48.4%, up 30 basis points year over year from 48.1%. This gross margin expansion was mainly driven by lower quality costs, while partially offset by an increase in input costs.
Adjusted selling, general, and administrative (SG&A) expenses improved year over year, declining to 27% of net sales from 28% in the prior-year period. The reduction was primarily driven by lower variable compensation expenses, highlighting disciplined expense management. This benefit was partially offset by higher media investment, with media spending rising to 10% of net sales from 8.9% last year, signaling a greater focus on brand and demand support. Meanwhile, logistics costs remained stable at 6.2% of net sales.

Adjusted EBITDA increased 16% year over year to $61.2 million. The adjusted EBITDA margin reached 21.4%, up 40 basis points year over year. Growth was primarily driven by higher sales volumes and stronger gross profit generation, reflecting improved operating performance. These gains were partially offset by an increase in adjusted SG&A.

Freshpet’s Financial Health Snapshot

The company ended the year with $278 million in cash and cash equivalents and generated positive free cash flow. As mentioned, subsequent to quarter-end, the company received $95.5 million in proceeds from the sale of Ollie, increasing the cash balance to approximately $400 million.

As of Dec. 31, 2025, the company had $397.3 million of debt outstanding, net of $5.2 million of unamortized debt issuance costs. Capital spending for 2025 totaled $148.2 million. For the year ended Dec. 31, 2025, cash from operations increased $6.3 million year over year to $160.6 million, driven largely by higher net sales and partially offset by a higher variable incentive compensation payment in the first quarter of 2025. The company intends to utilize its balance sheet to support ongoing capital needs in connection with its long-term capacity plan.

What to Expect From FRPT in the Future?

For 2026, Freshpet expects net sales growth between 7% and 10% compared to 2025. The midpoint of this range is consistent with the fiscal fourth quarter of 2025 growth levels. The company emphasized that this outlook assumes no material change in macroeconomic conditions and does not include any large-scale rollout of fridge island units. Growth is expected to remain ahead of the overall U.S. dog food category, allowing continued market share gains.

Adjusted EBITDA for 2026 is projected to be between $205 million and $215 million, representing 5% to 10% year-over-year growth. Media spending, as a percentage of net sales, is expected to remain roughly in line with 2025 levels, but spending will be front-half weighted, with the first quarter representing the highest media investment quarter. Incentive compensation expense will reset to normal target levels in 2026, creating a headwind compared to 2025 when lower payouts supported margins.

Adjusted gross margin is expected to improve by approximately 50 to 100 basis points at the midpoint of sales guidance. Margin expansion will be driven primarily by plant leverage and operational efficiency improvements, particularly OEE gains, partially offset by product mix. The company does not plan to add staffing in 2026 and intends to drive higher throughput from existing lines.

Capital expenditures are expected to be approximately $150 million in 2026. This figure excludes potential incremental investments of $20 million to $50 million that could occur if the company accelerates the rollout of its new manufacturing technology or expands fridge island deployment. At the planned $150 million CapEx level, Freshpet expects to remain free cash flow positive in 2026.

Freshpet’s 2027 Guidance

For fiscal 2027, the company expects net sales growth to remain well in excess of U.S. dog food category growth, which could translate to high single-digit or low double-digit growth depending on macroeconomic conditions and category health. The company expects to continue gaining market share.

Freshpet believes it can achieve at least 48% adjusted gross margin in 2027 under a variety of growth scenarios. The company updated its adjusted EBITDA margin target for 2027 to a range of 20% to 22%.

Management outlined multiple paths to reach the 2027 EBITDA margin target. These include higher sales growth driving leverage, further gross margin expansion through operational efficiency and new manufacturing technology, improved media effectiveness, and SG&A efficiencies. The updated 2027 targets do not rely heavily on accelerated deployment of the new production technology; rather, they assume continued OEE gains, yield improvements, and cost discipline. Accelerating new technology conversion could provide incremental upside, but is not required to achieve the stated margin targets.

FRPT currently carries Zacks Rank #2 (Buy). Its shares have gained 39.6% in the past six months against the industry’s 8.5% decline.

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