Freshpet (FRPT), a $4 billion dollar dog food maker, just reported 4Q25 earnings and the stock is down almost 4% in reaction. But I liked the report and the reaction doesn’t bother me at all. That’s because while Wall Street is focused on this quarter and this year, I have a much longer time horizon that puts any short term concerns in perspective.
I love the pet industry. As more and more young people are staying single or getting married but having less or no children, they are turning to pets as substitutes. According to page 14 of FRPT’s earnings presentation, the growth in pet parents has increased their total addressable market (TAM) from 27 million households in 2023 to 36 million currently. According to page 13, the dog food market is $38 billion of which FRPT currently has 4%. Talk about the wind at your sails and a huge opportunity for growth.
Wall Street doesn’t like the fact that sales are slowing – from 27% in 2024 to 13% in 2025 to guidance of 7-10% growth in 2026. That’s why shares are down in the premarket.
But if you look out a little further, you’ll see that FRPT has a great product and there is a core group of MVPs (their term for “ultra/super heavy buyers”) who are willing to spend big on their pets that make up most of their business. $506 million or 71% of their sales in 2025 went to these 2.4 million households. MVP’s have steadily increased from 1.0 million in 2021. We all know the single, 40ish man or woman who spares nothing for their pet.
Adjusted EBITDA Margin increased to 17.8% from 16.6% in 2024 and FRPT is targeting 20-22% in 2027.
Put it all together and you have a solid long term investment: a high quality company in a growing market. Valuation is not cheap but that’s because the growth opportunity is so big.
That’s why I can look past the noise and continue to hold, confident that FRPT will be significantly higher 3-5 years from now even if it’s lower today.
Comments
Log in or sign up to join the conversation.