What Happened?

Shares of pet food company Freshpet (NASDAQ: FRPT) jumped 12.1% in the afternoon session after the company reported third-quarter financial results that significantly surpassed Wall Street's profit expectations. Net sales for the quarter rose 14% year-over-year to $288.8 million, exceeding analyst forecasts. The company's earnings per share (EPS) came in at $1.86, which was substantially higher than the average analyst forecast of $0.42. This large increase in profit was primarily due to a one-time deferred tax benefit of $77.9 million. Freshpet also reported strong volume growth of 12.9% and an improved operating margin, which rose to 8.6% from 4.7% in the same period last year. The company generated positive free cash flow of $31.56 million for the quarter.

Is now the time to buy Freshpet? Access our full analysis report here.

What Is The Market Telling Us

Freshpet’s shares are extremely volatile and have had 31 moves greater than 5% over the last year. But moves this big are rare even for Freshpet and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 7 days ago when the stock gained 3% on the news that optimism surged over a potential trade truce between the U.S. and China. Reports of progress in trade negotiations ahead of a scheduled meeting between the two nations' presidents fueled investor confidence. An agreement would likely ease trade tensions and reduce or remove tariffs that have created economic uncertainty and higher costs for many multinational corporations. Also, optimism improved on expectations that the Federal Reserve will cut interest rates later in the week, especially after recent data showed inflation wasn't heating up as much as expected. Simply put, good news on trade, and the promise of lower borrowing costs created a powerful rally.

Freshpet is down 61.6% since the beginning of the year, and at $55.47 per share, it is trading 65.9% below its 52-week high of $162.59 from January 2025. Investors who bought $1,000 worth of Freshpet’s shares 5 years ago would now be looking at an investment worth $442.23.

P.S. In tech investing, "Gorillas" are the rare companies that dominate their markets—like Microsoft and Apple did decades ago. Today, the next Gorilla is emerging in AI-powered enterprise software. Access the ticker here in our special report.