Here's a classic Wall Street story: a company reports earnings that beat expectations, but the stock goes down anyway. That's what happened to Freshpet Inc. (FRPT) on Monday. The maker of refrigerated dog and cat food delivered a fourth-quarter profit that topped estimates, but revenue came in just a hair shy of what analysts were looking for. Sometimes the market cares more about the top line than the bottom line.

Let's break down the numbers. Net sales increased 8.6% to $285.2 million. That growth was driven by selling 9.7% more product, though the company got a bit less money for it on average, with a 1.1% unfavorable price/mix impact. Earnings came in at 64 cents per share, beating the estimate of 59 cents. But that revenue figure of $285.229 million narrowly missed the consensus estimate of $285.702 million. In the grand scheme, it's a tiny miss—less than half a million dollars—but in the world of earnings reactions, sometimes close isn't close enough.

The profitability picture was stronger. Net income jumped to $33.8 million from $18.1 million a year ago. Adjusted EBITDA, a measure of operating profitability, rose to $61.2 million from $52.6 million. Gross profit margin improved slightly to 43.3% of sales, up from 42.5%. The company also got more efficient on the cost side, with selling, general, and administrative expenses dropping to 27.7% of sales from 35.1%.

The Full-Year Picture

Zooming out to the full year ended December 31, 2025, the story is one of solid growth. Net sales increased 13.0% to $1.102 billion, crossing the $1 billion mark for the first time. Net income rose dramatically to $139.1 million from $46.9 million. A big part of that jump was a $68.4 million income tax benefit, primarily from the release of a valuation allowance. Adjusted EBITDA increased to $195.7 million from $161.8 million.

Perhaps one of the most important metrics for a growing company is cash flow. Freshpet generated positive free cash flow of $12.4 million for the year, a significant turnaround from negative $32.8 million in the prior year. The company spent more on marketing—$29.2 million extra in media spend—and had $17.7 million in non-recurring charges, but still managed to end the year with $278.0 million in cash and $397.3 million in debt.

The CEO's Take

CEO Billy Cyr had a reflective tone in his comments. "Fiscal year 2025 taught us some very important lessons and challenged the resilience of our business and our organization," he said. "In the end, our team demonstrated tremendous agility – delivering growth well in excess of the dog food category, surpassing $1 billion in net sales for the first time, expanding margins and achieving positive free cash flow."

Cyr highlighted several strategic shifts: "We retooled our marketing model to drive household penetration growth, and we are building momentum in e-commerce. We also began testing island fridges – our most significant step change in retail visibility and availability – and we recently started up our first manufacturing line utilizing a breakthrough technology that we believe can enhance both product quality and profitability."

Looking Ahead

Now for the part that might explain why the stock was down: the outlook. For 2026, Freshpet is forecasting net sales growth of 7% to 10%. That translates to sales of $1.179 billion to $1.212 billion. The midpoint of that range is about $1.196 billion, which is below the analyst estimate of $1.206 billion. The company also expects adjusted EBITDA of $205 million to $215 million and "positive free cash flow with capital expenditures of ~$150 million."

So here's the situation: Freshpet had a decent quarter, a good year, and is guiding for continued growth—but at a pace that suggests some caution. The market reaction—shares down about 3% in premarket trading to $72.26—tells you that investors were hoping for more. Sometimes beating earnings isn't enough if you're not also beating expectations for what comes next.