Value
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.0 |
| P/S | 8.6 |
| EV/EBITDA | 2.5 |
| Fwd P/E | 3.7 |
| PEG | 3.2 |
| Analyst target | 7.5 |
- ▸Forward P/E: 31.6x
- ▸PEG: 3.82
FRPT · Why this verdict
Why Freshpet (FRPT) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
The company has delivered exceptional earnings beats in each of the past four quarters and carries more than 36% upside to the price target with a 5.2-to-1 risk/reward ratio — but a confirmed technical downtrend, very low free cash conversion, and heavy customer concentration are material risks the favorable setup must overcome before the thesis fully pays out.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow amounts to only 7% of net income — a level flagged as a red flag for earnings quality — indicating that the large majority of reported profits are not converting into cash, which could constrain the ability to fund growth or service obligations in a downturn. Quality breakdown | Free cash flow as a percentage of net income rises above 50% over two consecutive quarters, confirming the gap between reported earnings and cash generation is narrowing structurally. | →Stable |
| CounterA low free cash flow-to-net income ratio in a growth-phase business often reflects heavy reinvestment in capacity or working capital; if that investment drives future revenue acceleration, the low conversion may prove temporary rather than structural. | ||
The company has surpassed earnings estimates in each of the past four quarters with an average positive surprise of approximately 148%, signaling a rare discipline of consistently under-promising and over-delivering that is unusual in this peer group. Catalyst breakdown | The beat streak extends to five or more consecutive quarters, confirming the pattern is structural rather than the result of unusually depressed expectations in any single period. | ↑Improving |
| CounterExtremely high average surprise percentages can reflect very low absolute estimate baselines rather than genuine outperformance; if analyst expectations normalize upward after a string of beats, the degree of outperformance will likely narrow materially. | ||
At current prices there is approximately 36% upside to the price target with a risk/reward ratio of roughly 5.2-to-1 — one of the more attractive geometric setups in the peer group, sufficient to clear the asymmetry bar for an appropriately sized position. Price targets | The stock makes meaningful progress toward the $74 target within 12 months, with realized upside exceeding 15% from current levels. | ↓Deteriorating |
| CounterA confirmed technical downtrend and a death cross warning mean the stock may continue drifting lower before any recovery materializes; the favorable risk/reward is a theoretical construct that only pays off if the downtrend reverses, which is not yet confirmed. | ||
The stock is trading below its 200-day moving average, which itself carries a negative slope of approximately 3.3% per month — a confirmed downtrend that suggests near-term price pressure may persist even if the fundamental outlook improves. Momentum breakdown | The stock reclaims and holds above its 200-day moving average for four consecutive weeks, with the moving average slope turning positive — reversing the downtrend signal that currently serves as a warning. | ↑Improving |
| CounterImproving MACD and rising on-balance volume suggest buying interest is beginning to build beneath the surface; if these leading indicators continue to strengthen, the price may recover above the 200-day moving average before the downtrend becomes entrenched. | ||
The top ten customers account for approximately 68% of revenue, creating significant concentration risk; the loss of even one or two major accounts could produce a revenue shortfall that exceeds the entire current analyst upside target. Risk breakdown | Customer concentration among the top ten falls below 55% over the next four quarters as new accounts scale, reducing the exposure to any single departure. | ↓Deteriorating |
| CounterA high share of revenue from a small number of large customers can reflect deep strategic partnerships and strong switching costs rather than fragility; stable or growing revenue from concentrated accounts over multiple periods suggests the relationships are durable. | ||
Free cash flow amounts to only 7% of net income — a level flagged as a red flag for earnings quality — indicating that the large majority of reported profits are not converting into cash, which could constrain the ability to fund growth or service obligations in a downturn.
→StableQuality breakdown
- Expectation
- Free cash flow as a percentage of net income rises above 50% over two consecutive quarters, confirming the gap between reported earnings and cash generation is narrowing structurally.
CounterA low free cash flow-to-net income ratio in a growth-phase business often reflects heavy reinvestment in capacity or working capital; if that investment drives future revenue acceleration, the low conversion may prove temporary rather than structural.
The company has surpassed earnings estimates in each of the past four quarters with an average positive surprise of approximately 148%, signaling a rare discipline of consistently under-promising and over-delivering that is unusual in this peer group.
↑ImprovingCatalyst breakdown
- Expectation
- The beat streak extends to five or more consecutive quarters, confirming the pattern is structural rather than the result of unusually depressed expectations in any single period.
CounterExtremely high average surprise percentages can reflect very low absolute estimate baselines rather than genuine outperformance; if analyst expectations normalize upward after a string of beats, the degree of outperformance will likely narrow materially.
At current prices there is approximately 36% upside to the price target with a risk/reward ratio of roughly 5.2-to-1 — one of the more attractive geometric setups in the peer group, sufficient to clear the asymmetry bar for an appropriately sized position.
↓DeterioratingPrice targets
- Expectation
- The stock makes meaningful progress toward the $74 target within 12 months, with realized upside exceeding 15% from current levels.
CounterA confirmed technical downtrend and a death cross warning mean the stock may continue drifting lower before any recovery materializes; the favorable risk/reward is a theoretical construct that only pays off if the downtrend reverses, which is not yet confirmed.
The stock is trading below its 200-day moving average, which itself carries a negative slope of approximately 3.3% per month — a confirmed downtrend that suggests near-term price pressure may persist even if the fundamental outlook improves.
↑ImprovingMomentum breakdown
- Expectation
- The stock reclaims and holds above its 200-day moving average for four consecutive weeks, with the moving average slope turning positive — reversing the downtrend signal that currently serves as a warning.
CounterImproving MACD and rising on-balance volume suggest buying interest is beginning to build beneath the surface; if these leading indicators continue to strengthen, the price may recover above the 200-day moving average before the downtrend becomes entrenched.
The top ten customers account for approximately 68% of revenue, creating significant concentration risk; the loss of even one or two major accounts could produce a revenue shortfall that exceeds the entire current analyst upside target.
↓DeterioratingRisk breakdown
- Expectation
- Customer concentration among the top ten falls below 55% over the next four quarters as new accounts scale, reducing the exposure to any single departure.
CounterA high share of revenue from a small number of large customers can reflect deep strategic partnerships and strong switching costs rather than fragility; stable or growing revenue from concentrated accounts over multiple periods suggests the relationships are durable.
Per-dimension breakdown
Quality
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.8 |
| ROA | 2.3 |
| Gross margin | 4.2 |
| Op margin | 0.6 |
| Net margin | 8.8 |
| Current ratio | 6.8 |
| FCF quality | 0.6 |
| Moat | 6.9 |
| Piotroski F | 8.9 |
- ▸Strong margins: 18%
- ▸Earnings quality RED FLAG: 7% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
5.8/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 5.8 |
Momentum
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 7.2 |
| Volume | 1.9 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+0.1%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.3 |
| Price target | 9.1 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 39%
Insider
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 3.1 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Notable insider selling — $13,499,553 (0.482% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.2 |
| quality rank | 8.0 |
| growth rank | 7.5 |
- ▸Best-in-class margins
Technical
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.7 |
| support resistance | 2.2 |
| 52w position | 3.6 |
Risk (lower is worse)
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.9 |
| days to cover | 4.5 |
| volatility | 0.0 |
| put call | 4.2 |
| implied vol | 0.3 |
| beta | 4.7 |
| debt equity | 8.4 |
- ▸Short squeeze setup: 21% short, quality 7.5
- ▸High IV: 78%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 14 days
How the verdict was assembled
Engine trigger
Mixed signals. Hold existing position.
Engine technical detail
verdict_path:
L4:PATH_F_HOLD_DEFAULTPassed (6)
- MOMENTUM:6.7>=5.5
- ASYMMETRY:1.9>=1.5
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (2)
- INSIDER:0.48%=MODERATE
- EARNINGS_PROXIMITY:14d<=14d (soft)
Reward-to-Risk
1.94
Upside
+24.8%
Downside
12.8%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 14d with 4/4 beat streak
SuitabilityAggressive — Beta 1.60>1.3, MCap $2.8B<$5B
Investment implication
The default F-path HOLD fired without any positive-conviction gate triggering — no momentum acceleration, no quality+value crossover, no setup recognition. Highest-clear gate: MOMENTUM:6.7>=5.5. Top dim: Catalyst at 7.5; weakest: Technical at 2.5. The engine's read is one of pattern absence — no directional conviction in either direction at current asymmetry.
The strongest dimensions are Catalyst at 7.5, Sentiment at 7.3, and Momentum at 6.7; the weakest are Technical at 2.5, Risk (lower is worse) at 4.4, and Quality at 5.0. The V9 engine cleared all gates with 2 warnings, producing an asymmetric reward-to-risk of 1.94 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Earnings Beat Streak
Trip ifEPS surprise falls below 0% in the next reported quarter.
- P2Large Upside Favorable Rr
Trip ifStock price rises above $70, compressing remaining upside to the price target below 6%.
- P3Confirmed Technical Downtrend
Trip ifStock price closes above $60 AND holds above the 200-day moving average for 4 consecutive weeks.
- P4Very Low Fcf Conversion
Trip ifFree cash flow as a percentage of net income rises above 50% for 2 consecutive quarters.
- P5Customer Concentration Risk
Trip ifTop-10 customer concentration falls below 55% of total revenue for 2 consecutive quarters.