Chicago, IL – February 26, 2025 – Today, Zacks Equity Research discusses Sysco Corp. SYY, General Mills, Inc. GIS, Post Holdings, Inc. POST and Freshpet, Inc. FRPT.
Link: https://www.zacks.com/commentary/2420820/4-miscellaneous-food-stocks-in-focus-despite-industry-hurdles
The Zacks Food-Miscellaneous industry is grappling with challenges stemming from a tough macroeconomic landscape, where inflation has strained consumer budgets and driven a shift toward private-label alternatives. In addition, rising input and operational expenses continue to weigh on profit margins.
To navigate these headwinds, companies are focusing on cost efficiencies, investing in innovation and expanding their portfolios with health-conscious and budget-friendly offerings. These strategic initiatives position Sysco Corp., General Mills, Inc., Post Holdings, Inc. and Freshpet, Inc. well for long-term growth.
The Zacks Food-Miscellaneous industry consists of companies that manufacture and sell a wide range of food and packaged food items, such as cereals, flour, sauces, bakery items, spices and condiments, natural and organic food items and frozen products. Some companies also provide comfort food items, such as chocolates and ready-to-serve meals, soups and snacks.
A few players are engaged in providing pet food products and supplements. Several food companies also offer organic and natural products. Companies operating in this space sell their products mainly through wholesalers, distributors, large retail organizations, grocery chains, mass merchandisers, drug stores and e-commerce service providers. Some also cater to foodservice channels, including restaurants, cafes and hotels. Others offer services to schools, hospitals and industry caterers.
These factors have pressured sales volumes for several major food companies. In response, businesses have adapted their strategies by prioritizing value-driven marketing, launching promotional initiatives and expanding their assortment of budget-friendly offerings.
Cost Pressures: Rising prices for key ingredients, coupled with increasing labor, packaging and transportation expenses, are straining profit margins. Furthermore, companies are absorbing higher operational costs as they invest in performance improvements, efficiency upgrades and capacity expansions.
While these investments are essential for long-term success, they are contributing to near-term financial challenges. The persistence of these elevated costs poses an ongoing challenge to profitability. To counterbalance these pressures, companies are pursuing various cost-control strategies, including streamlining supply chains, optimizing sourcing practices and implementing efficiency measures.
Strengthening Brands and Revamping Portfolio: Established brands continue to provide a competitive edge, fueling strong customer loyalty and supporting business growth. This advantage, combined with a commitment to innovation, has helped companies maintain their market position. As demand for healthier and more nutritious products rises, companies are introducing innovative organic options and expanding their wellness-focused offerings.
Beyond product development, efforts to modernize production capabilities and diversify product portfolios have delivered meaningful results. These initiatives have reinforced market positioning while paving the way for future expansion by ensuring adaptability to shifting consumer preferences and industry trends. The ability to stay aligned with evolving customer demands has become a crucial driver of success.
The Zacks Food-Miscellaneous industry is housed within the broader Zacks Consumer Staples sector. The industry currently carries a Zacks Industry Rank #177, which places it in the bottom 29% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence about this group’s earnings growth potential. Since the beginning of October 2025, the industry’s consensus earnings estimate for the fiscal year ended December 2025 has decreased 9.6%.
Let’s take a look at the industry’s performance and current valuation.
The Zacks Food-Miscellaneous industry has underperformed the S&P 500 and the broader Zacks Consumer Staples sector over the past year.
The industry has declined 9% over this period compared to the S&P 500’s growth of 19.7%. Meanwhile, the broader sector has risen 2.3% in the said time frame.
On the basis of forward 12-month price-to-earnings (P/E), which is commonly used for valuing consumer staples stocks, the industry is currently trading at 16.07X compared with the S&P 500’s 22.23X and the sector’s 17.45X.
Over the past five years, the industry has traded as high as 20.74X and as low as 14.41X, with the median being at 17.81X.
Freshpet: The company, which focuses on producing fresh, natural and preservative-free pet food, currently sports a Zacks Rank of 1 (Strong Buy). The rising trend of humanization of pets is fueling demand for premium, fresh and natural pet food. Freshpet’s emphasis on fresh, preservative-free ingredients aligns with consumer preferences for healthier options for their pets. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company’s partnerships with major retailers enable it to maintain strong distribution networks and ensure the widespread availability of its products. Freshpet has also been benefiting from its focus on boosting production capabilities, optimizing the supply chain and undertaking cost control. The Zacks Consensus Estimate for Freshpet’s current financial-year earnings per share (EPS) has risen by 1.9% to $1.58 in the past seven days. This suggests substantial growth from the year-ago period’s earnings of 77 cents. Shares of FRPT have declined 2.3% in the past year.
Post Holdings: The Zacks Rank #2 (Buy) company has made notable strides with strategic buyouts, including the purchase of Perfection Pet Foods and Deeside Cereals, enhancing its pet food and cereal categories. With its expanding distribution footprint and premium product mix, the Foodservice segment remains a cornerstone of Post Holdings’ growth strategy, poised for continued success in fiscal 2025 and beyond.
Post Holdings also benefits from its pricing strategies to counter input cost inflation. The Zacks Consensus Estimate for POST’s current fiscal year EPS has risen from $6.30 to $6.41 over the past 30 days. Shares of this Saint Louis, MO-based company have rallied 10.1% over the past year.
General Mills: This branded consumer foods company is leveraging the strength of its diverse brand portfolio and Accelerate strategy, which emphasizes brand-building, innovation and efficiency to enhance market positioning and profitability. Key brands of General Mills hold strong market shares and consumer loyalty across baked goods, pizza and Mexican food categories.
General Mills’ Holistic Margin Management strategy has helped protect margins amid ongoing cost pressures by reducing supply-chain costs and enhancing efficiency. The Zacks Consensus Estimate for GIS’ current fiscal year EPS has decreased from $4.41 to $4.38 over the past seven days. Shares of this Zacks Rank #3 (Hold) company have dipped 5.6% over the past year.
Sysco: This Zacks Rank #3 company continues to thrive in the growing food-away-from-home industry, courtesy of its diversified operations. Sysco’s focus on its Recipe for Growth has been strengthening its capacities across sales and supply chain.
The five strategic pillars include enhancing customers’ experience via digital tools, improving the supply chain to cater to customers efficiently and consistently and providing customer-oriented merchandising and marketing solutions to augment sales. These pillars also encompass targeting team-based selling and cultivating new capacities, channels and segments, along with sponsoring investments via cost-saving initiatives.
The Zacks Consensus Estimate for SYY’s current fiscal-year EPS has increased by a penny to $4.58 in the past 30 days. The consensus mark suggests 6.3% year-over-year growth. Shares of Sysco have tumbled 8.9% in a year.
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