Stock Buy: Treehouse Foods Inc.

Treehouse Foods Inc. (THS: 44.52 +0.12 +0.27%) recently hit a new 52-week high on better than expected Q4 results from February 11 that included an 18% earnings surprise.

Company Description

TreeHouse Foods, Inc. operates as a specialty food manufacturing company serving grocery stores and food service channels in the United States. The company was founded in 1862 and has a market cap of $1.41 billion.

Fourth-Quarter Results

Sales for the period were up 2% from last year to $405 million. Earnings came in far better than expected at 78 cents, 18% ahead of the Zacks Consensus Estimate. The company has produced consistent results over the last year, beating the consensus in each quarter by an average of 20%.

Treehouse noted that its results were driven by strength in its largest business segment, North American Retail Grocery, where sales were up 5% from last year to $266 million. The segments operating margin also jumped higher to 17% from 14% last year.

Treehouse also mentioned that it expects to complete its acquisition of Strum Foods in the first quarter of 2010. Treehouse will pay $660 million for Strum, which produces $300 million in annual revenue, with $400 million in debt, $100 million in equity and additional borrowing from the company's revolving line of credit.

Estimates Jump

The good quarter sent estimates higher, with the current year adding 29 cents to $2.67. The next-year estimate is up 12 cents in the same time to $2.96, a solid 11% growth projection.

Valuation

In spite of the recent gains, THS still has some value, trading with a forward P/E multiple of 14.5X, a discount to the overall market.

The Chart

Shares of THS recently hit a new 52-week high at $45.02 on the good quarter, take a look below.