Freshpet Raises 2026 Outlook, Bets on 'Super-Serve MVPs' As Competition Heats Up

Freshpet Inc. (NASDAQ:FRPT) shares slipped Wednesday even though the company’s third-quarter 2026 results topped estimates and it raised its 2026 sales outlook.

The pet food company posted diluted EPS of 58 cents, beating the 43-cent estimate. Sales rose 10.0% year over year to $317.8 million, beating the $312.0 million estimate, driven by higher volume.

Margins Expand As Freshpet Refines Growth Strategy

Net income was $27.9 million, down from $101.7 million a year earlier. The prior-year quarter included a $77.9 million deferred income tax benefit from the release of most of a valuation allowance, which boosted 2025 net income.

Gross margin expanded to 44.5% from 39.5%, while adjusted gross margin increased to 50.0% from 46.0%.

Adjusted EBITDA rose to $64.5 million from $54.6 million, with margin improving to 20.3% from 18.9%.

On the earnings call, CEO Billy Cyr said Freshpet is focusing more advertising on its highest-value households as competition increases.

"We have evolved our strategy to super-serve MVPs to drive greater returns as the category becomes more competitive," Cyr said.

MVP household penetration increased 8%, while e-commerce sales climbed 35% year over year and digital orders accounted for 16.9% of the business.

Freshpet’s store count also rose 5% to more than 31,000 locations.

Management Says New Entrants Have Not Hurt Performance

President and COO Nicki Baty said Freshpet has not seen deterioration where newer brands compete directly.

"We’ve not seen any impact either on our sales line or on any retention, which is particularly pleasing for us in places where we compete more head-to-head with some of those newer brands," Baty said.

Baty added that Freshpet averages "somewhere between six to eight times more the sales velocity than any of those brands that are in play."

Technology, Efficiency Support Future Margin Upside

Cyr said Fresh from the Kitchen has benefited from the company’s new bag-production technology.

"Since we converted that product to the new technology, we’ve seen consumer feedback on quality improve significantly, and volume trends have stepped up noticeably," Cyr said.

Freshpet expects the installed technology to deliver more than 100 basis points of adjusted gross margin improvement when fully optimized.

Management also said operating efficiencies unlocked more than $100 million of incremental capacity from the existing manufacturing footprint, equivalent to a new production line, allowing it to defer some planned investment.

Freshpet Raises 2026 Outlook

Freshpet raised fiscal 2026 sales guidance to $1.234 billion-$1.245 billion from $1.212 billion-$1.234 billion, versus a $1.228 billion estimate.

Adjusted EBITDA guidance narrowed to $215 million-$220 million from $210 million-$220 million, while capital expenditures are now expected at $125 million-$150 million.

The company generated $60.8 million in quarterly operating cash flow and $37.8 million in free cash flow, ending September with $345.9 million in cash.

For 2027, Freshpet reiterated targets of at least 49% adjusted gross margin and a 20%-22% adjusted EBITDA margin.

Management said that if inflation does not improve significantly, it expects to land in the lower half of the EBITDA margin range and plans selective price increases to address ingredient and packaging cost pressures.

FRPT Stock Price Activity: Freshpet shares are trading lower by 2.39% at $67.94 at the time of publication on Wednesday, according to Benzinga Pro data.

Photo by T. Schneider via Shutterstock