The Marzetti Company (MZTI)

Specialty food company The Marzetti Company (NASDAQ:MZTI) met Wall Streets revenue expectations in Q4 CY2025, with sales up 1.7% year on year to $518 million. Its GAAP profit of $2.15 per share was 3.4% below analysts’ consensus estimates.

Company Overview

Known for its frozen garlic bread and Parkerhouse rolls, The Marzetti Company (NASDAQ:MZTI) sells bread, dressing, and dips to the retail and food service channels.

As America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.

Competitors in specialty foods include Treehouse Foods (NYSE:THS), Flowers Foods (NYSE:FLO), and Clorox (NYSE;CLX), which owns the Hidden Valley dressing brand.

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years.

With $1.93 billion in revenue over the past 12 months, The Marzetti Company is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers.

As you can see below, The Marzetti Company’s sales grew at a sluggish 3.2% compounded annual growth rate over the last three years, but to its credit, consumers bought more of its products.

This quarter, The Marzetti Company grew its revenue by 1.7% year on year, and its $518 million of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 2.1% over the next 12 months, similar to its three-year rate. This projection is underwhelming and implies its products will see some demand headwinds.

Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.

The Marzetti Company’s average quarterly volume growth was a healthy 1.5% over the last two years. This is pleasing because it shows consumers are purchasing more of its products.

In The Marzetti Company’s Q4 2026, sales volumes dropped 3.1% year on year. This result was a reversal from its historical levels.

The Marzetti Company has bad unit economics for a consumer staples company, giving it less room to reinvest and develop new products. As you can see below, it averaged a 23.6% gross margin over the last two years. Said differently, for every $100 in revenue, a chunky $76.42 went towards paying for raw materials, production of goods, transportation, and distribution.

The Marzetti Company’s gross profit margin came in at 26.5% this quarter, in line with the same quarter last year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

The Marzetti Company’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 11.3% over the last two years. This profitability was solid for a consumer staples business and shows it’s an efficient company that manages its expenses well. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, The Marzetti Company’s operating margin might fluctuated slightly but has generally stayed the same over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, The Marzetti Company generated an operating margin profit margin of 14.5%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

The Marzetti Company’s EPS grew at a spectacular 20.8% compounded annual growth rate over the last three years, higher than its 3.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

In Q4, The Marzetti Company reported EPS of $2.15, up from $1.78 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects The Marzetti Company’s full-year EPS of $6.53 to grow 10.8%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

The Marzetti Company has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 10.2% over the last two years, quite impressive for a consumer staples business.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Although The Marzetti Company hasn’t been the highest-quality company lately because of its poor top-line performance, it historically found a few growth initiatives that worked. Its five-year average ROIC was 17.3%, higher than most consumer staples businesses.

We struggled to find many positives in these results. Overall, this quarter could have been better. The stock remained flat at $174.08 immediately following the results.

Updated: February 3, 2026 at 7:54 AM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

The Marzetti Company isn’t a terrible business, but it doesn’t pass our quality test. For starters, its revenue growth was uninspiring over the last three years, and analysts expect its demand to deteriorate over the next 12 months. And while its EPS growth over the last three years has been fantastic, the downside is its gross margins make it more difficult to reach positive operating profits compared to other consumer staples businesses. On top of that, its brand caters to a niche market.

The Marzetti Company’s P/E ratio based on the next 12 months is 24x. Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $197.20 on the company (compared to the current share price of $174.08).