Freshpet Meets Lowered 2025 Guidance with 13% Sales Growth and Positive FCF, but Competitive and Valuation Risks Persist

What happened

Freshpet reported its fourth quarter and full year 2025 financial results, achieving 13% net sales growth and positive free cash flow as guided. This performance aligns with the company's reset expectations from late 2025, which had been revised down from more aggressive targets due to decelerating growth and market headwinds. According to the DeepValue report, these results reflect operational discipline and margin improvement, but growth has slowed from historical highs amid rising competition from Blue Buffalo and other entrants. The company also provided a full year 2026 outlook, which requires careful evaluation for signs of sustainable momentum or further pressure from industry challenges. Despite the cash flow milestone, the positive spin in the announcement masks underlying vulnerabilities, including intense promotional threats and a valuation that still prices in optimistic expansion.

Implication

The 13% sales growth, while meeting guidance, confirms a slowdown from past rates and may not support the current ~28x EV/EBITDA multiple without sustained margin gains. Positive free cash flow is a critical inflection, but it must be durable against potential capex increases and competitive spending from rivals like Blue Buffalo. Valuation remains stretched, embedding expectations for continued high-single-digit growth and margin expansion that could be eroded by market share losses. Competitive dynamics are intensifying, with General Mills' fresh rollout likely to pressure Freshpet's fridge dominance and pricing power in 2026, threatening long-term growth assumptions. Therefore, investors should adhere to the DeepValue framework, waiting for either a pullback to the $60 attractive entry point or clearer evidence of share defense and FCF sustainability over the next 6-12 months.

Thesis delta

The 2025 results confirm the base case scenario in the DeepValue report, showing execution on margins and cash flow but no material improvement in the competitive threat landscape. This reinforces the existing 'WAIT' thesis, as the stock's premium valuation still discounts growth that faces heightened risks from Blue Buffalo's rollout and market headwinds. No shift in investment call is warranted; maintain a cautious stance until further data on 2026 performance and competitive responses emerges.