Freedom Broker analysts upgraded their rating on Seneca Foods (SENEA) shares from “Hold” to “Buy” and maintained a target price of $202. From the Nov. 6 close of $151.04, the upside potential is about 33.7%. Experts believe that growth in frozen vegetable sales, improved underlying profitability and debt reduction support the company’s outlook.
Frozen vegetable producer
Seneca Foods is one of the largest producers of canned and frozen vegetables in the United States. The company also makes fruit products and supplies foods under retailers’ private labels. In March 2026, it acquired Green Giant’s U.S. frozen vegetable business, which helps expand sales under its own brands.
Green Giant supports revenue growth
In the second quarter of fiscal 2027, Seneca increased revenue 7.1% year over year to $492.6 million. Most of the increase was driven by higher selling prices and changes in the sales mix, while a smaller portion came from higher volumes. Frozen vegetable sales rose 53.1% to $68.7 million. According to Freedom, this was aided by a shift from contract manufacturing to selling products under its own brands following the Green Giant acquisition. Revenue from canned vegetables increased 3.7% to $391.2 million.
Growth in the core segments offset a decline in snack and other product sales. Analysts believe that further development of the frozen vegetable business should support Seneca’s results.
Why reported profit declined
Seneca’s net income fell 1.7% to $29.2 million, and diluted earnings per share slipped from $4.29 to $4.27. However, analysts point to the impact of inventory accounting: it worsened reported results and masked an improvement in the underlying profitability of the business.
Seneca uses the LIFO method, under which the cost of the most recently acquired or produced inventories is recognized first in cost of goods sold. In the reported quarter, an adjustment under this method increased expenses by $7.2 million, whereas a year earlier it reduced them by $7.7 million.
Without this adjustment—under the alternative FIFO method—gross margin increased roughly from 11.8% to 14%. Adjusted net income under FIFO rose 44.6% to $34.7 million. In Freedom’s view, these metrics better reflect the improvement in the company’s underlying profitability.
Additional support came from a 55.1% reduction in net interest expense to $2.1 million. Seneca reduced term-loan debt, and the average borrowing rate declined.
The company directs cash to debt repayment
In the first half of the year, Seneca repaid $100 million of term loans early. At the same time, it drew $26 million under its revolving credit facility. Analysts note that debt reduction remains the company’s main priority in capital allocation.
Operating cash flow for the half-year totaled $81.1 million versus $83 million a year earlier. Free cash flow fell from $64.2 million to $46.4 million as the company increased capital expenditures.
At the same time, in the second quarter operating cash flow was negative. This is due to the seasonal cycle: Seneca primarily processes and packages vegetables from June to November and then sells the products over the following twelve months. During the season, the company builds inventory and directs more funds to ongoing production needs.
What Freedom expects next
Analysts cut their revenue forecast for Seneca for fiscal 2027 to $1.855 billion from $1.893 billion. The new guidance implies 11.7% growth versus the prior year. At the same time, experts raised their forecast for diluted earnings per share to $14.06 from $13.83, including due to lower interest expense and a reduced share count.
This is below the result of the previous fiscal year. Thus, the “Buy” recommendation reflects improving underlying profitability, debt reduction and the gap between the market price and analysts’ valuation.
Freedom sees the main risks as seasonal cash needs and high production costs. Steel, packaging, agricultural inputs, labor and transportation remain expensive, and competition may limit the company’s ability to raise prices.
Seneca shareholders also approved a five-for-one stock split. As of the review date, Nov. 9, the company had not yet carried out the split. The share price and the $202 target cited in the analysis are stated pre-split.
Previously, in June, Freedom raised Seneca’s target price from $194 to $202 after strong results for fiscal 2026. At the time, analysts highlighted cash flow growth and Green Giant’s contribution. In the new review, the target remained unchanged, and the rating improved from “Hold” to “Buy.”
Not an individual investment recommendation.