Freshpet actually called for revenue growth to accelerate from 33.5% in 2021 to at least 35%, reaching $575 million revenue at minimum. That was ahead of analyst expectations for $562.4 million.
Freshpet has been challenged by supply chain constraints and other headwinds like cost inflation and rising wages over the last year, and the stock is still down 40% from its peak last spring. The company has also invested in new capacity, including bringing a new factory in Texas online next year, which will help drive its expansion through 2025.
Those factors have been costly as the company's loss widened in 2021 even as it continued to grow rapidly. However, the company expects the expansion in Texas will help it achieve its 2025 goals of serving 11 million households, generating $1.25 billion revenue with 25% EBITDA margins, or $312 million in EBITDA on $1.25 billion in revenue.
Despite the pullback over the last year, Freshpet stock is still expensive. It's been unprofitable and trades at a price-to-sales ratio around 10, which is expensive for a consumer stock. However, the company has a number of tailwinds, including the secular growth in the pet food industry, increasing demand for healthier pet food, and the "humanization of pets," meaning young adults are spending more on their furry friends.
The pet industry is also recession-proof, making it appealing for investors, and the company's placement of roughly 25,000 Freshpet Fridges in stores across the country gives it a competitive advantage and creates barriers to entry.
Freshpet stock is up nearly 500% since its 2014 IPO. The company is unlikely to repeat that kind of performance as much of that growth came from multiple expansion, but if it can achieve its 2025 goals, there's a good chance the stock will outperform the market over the long term.