• If you are wondering whether Freshpet stock is offering value at its current price, it helps to step back and look at what the recent share performance is really telling you.
• Freshpet shares last closed at US$69.20, with recent returns of 15.1% over 30 days and 15.0% year to date, set against a 7 day return of a 3.2% decline and a 1 year return of a 53.7% decline.
• Recent news flow around Freshpet has largely focused on its position in the premium pet food market and how investors are reacting to shifting expectations for the business. This context helps explain why the stock has seen periods of both enthusiasm and caution over the past year.
• Right now, our valuation checks suggest Freshpet scores 0 out of 6 for being undervalued. Next, we will look at how different valuation methods assess the stock, and then finish with a way of thinking about valuation that can give you an even clearer picture.

Freshpet scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Freshpet Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and then discounting those back to today in dollar terms.

For Freshpet, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is a loss of $75.53 million. Analysts and extrapolated estimates in the model point to positive free cash flows in future years, with projected free cash flow of $61.38 million in 2026 and $105.00 million in 2029, and further annual projections extending out to 2035.

Using these cash flow projections and discounting them back, the DCF model used here produces an estimated intrinsic value of US$53.90 per share. Compared to a recent share price of US$69.20, this output implies the stock is about 28.4% overvalued on this particular measure.

Result: OVERVALUED (per this DCF model)

Our Discounted Cash Flow (DCF) analysis suggests Freshpet may be overvalued by 28.4%. Discover 864 undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Freshpet Price vs Earnings

For profitable companies, the P/E ratio is a useful way to gauge how much you are paying for each dollar of earnings. It ties the share price directly to the company’s ability to generate profit, which is usually what drives long term returns.

What counts as a “normal” P/E depends on how fast earnings are expected to grow and how risky those earnings are. Higher expected growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk usually points to a lower, more conservative P/E.

Freshpet currently trades on a P/E of 27.36x. That sits above the Food industry average P/E of 22.81x and also above the peer average of 18.41x. Simply Wall St’s Fair Ratio framework goes a step further. It estimates what a P/E might look like for Freshpet given its earnings profile, industry, profit margins, size and risk factors, and arrives at a Fair Ratio of 17.49x.

Because the Fair Ratio builds in company specific factors, it can be more informative than a simple comparison to peers or the broad industry. With the current P/E of 27.36x above the Fair Ratio of 17.49x, this approach indicates the shares are pricing in a richer outlook than that model suggests.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1425 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Freshpet Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to attach your own story about Freshpet to the numbers, including your view of fair value and your expectations for future revenue, earnings and margins.

A Narrative links what you believe about a company, such as Freshpet’s ability to grow in premium pet food, to a financial forecast and then to a fair value that you can compare directly with today’s share price.

On Simply Wall St, millions of investors use Narratives on the Community page as an easy tool to see whether their Fair Value suggests Freshpet is attractively priced or expensive at the current market Price. Those Narratives automatically refresh when new information like results or news is added.

For example, one Freshpet Narrative might assume a higher fair value based on stronger future margins, while another might point to a lower fair value based on more cautious revenue assumptions. The platform simply shows you both side by side so you can decide which story you agree with.

Do you think there's more to the story for Freshpet? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.