Freshpet Inc (FRPT)

Return on equity (ROE)

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income US$ in thousands 46,925 -33,614 -55,763 -27,694 -3,188
Total stockholders’ equity US$ in thousands 1,055,360 953,454 1,031,570 719,754 394,169
ROE 4.45% -3.53% -5.41% -3.85% -0.81%

December 31, 2024 calculation

ROE = Net income ÷ Total stockholders’ equity
= $46,925K ÷ $1,055,360K
= 4.45%

The analysis of Freshpet Inc.'s return on equity (ROE) over the specified period indicates significant fluctuations with an overall trend toward improvement in recent years. As of December 31, 2020, the company exhibited a negative ROE of -0.81%, suggesting initial difficulties in generating profits relative to shareholders’ equity. This negative value deepened by December 31, 2021, reaching -3.85%, and further declined to -5.41% by December 31, 2022, indicating increasing challenges in profitability and a possibly deteriorating operational performance or strategic issues impacting shareholder returns.

In the subsequent year, 2023, the negative ROE narrowed slightly to -3.53%, reflecting a modest improvement but still remaining in negative territory, which implies that the company continued to face headwinds in producing net income relative to equity. The most notable change occurred by December 31, 2024, when the ROE turned positive again at 4.45%. This transition signifies a significant turnaround in the company's profitability, suggesting that Freshpet Inc. has managed to generate more effective net income relative to its shareholder equity, potentially due to operational improvements, cost efficiencies, or market conditions favoring its business model.

Overall, the trend from 2020 through 2024 illustrates a progression from negative profitability, with the most recent data showcasing a move into positive territory. The shift toward a positive ROE indicates a potentially strengthening financial position and improved investor confidence, though it remains important to consider other operational and financial factors to fully understand the implications of these changes.