Post Holdings (POST) Gains on Solid Buyouts & Pricing Actions

Post Holdings, Inc. POST is benefiting from its focus on acquisitions, which has been helping it expand its customer base. The company is on track with effective pricing actions. Strength in the Post Consumer Brands is working well for the consumer packaged goods company.

These upsides boosted POST’s first-quarter fiscal 2024 results, with the top and the bottom line increasing year over year and surpassing the Zacks Consensus Estimate. The Zacks Rank #1 (Strong Buy) stock has increased 16.8% in the past three months compared with the industry’s 3.5% growth.

Let’s discuss this in detail.

Zacks Investment Research
Image Source: Zacks Investment Research

Buyouts: Key Driver

Post Holdings intends to strengthen its business on the back of strategic acquisitions. In December 2023, the company acquired Perfection Pet, which is part of its Post Consumer Brands segment. On Apr 28, 2023, Post Holdings acquired a select pet food brand from The J.M. Smucker Co. Such an acquisition provides the company with a compelling entry point into the attractive and growing pet food category. In December 2023, the company also acquired Deeside Cereals to form a part of its Weetabix segment. In the first quarter of fiscal 2024, the company’s net sales included $428.9 million from acquisitions. These buyouts are expected to continue boosting performance in the forthcoming period.

What Else is Working Well for Post Holdings?

Post Holdings has been benefiting from strategic pricing actions undertaken to counter inflationary headwinds. The trend continued in the first quarter of fiscal 2024. Higher average net selling prices drove the company’s performance in the Post Consumer Brands and Weetabix segments.

The company has been reaping benefits from growing Post Consumer Brands. In the fiscal first quarter, segmental net sales of $988.6 million jumped 78.2%, primarily owing to $426.6 million in sales from acquisitions. The company’s pet food and grocery business delivered impressive results in the segment. The Pet food business performed better than expected on the back of solid manufacturing performance. The Grocery business gained from carryover pricing. Segment profit showed significant growth, up 67.3% to $132.7 million, with adjusted EBITDA rising 68.1% to $189.8 million. This reflects strong operational performance and acquisition synergies.

Wrapping Up

Post Holdings is witnessing persistent coupled with higher interest rates, which is straining consumer’s spending power. In addition, reduced benefit support among economically sensitive consumers is compelling shoppers to be selective with their purchases.

That said, POST’s focus on the upsides mentioned above is likely to keep narrating its growth story.

Other Solid Food Bets

The Chef’s Warehouse CHEF, which engages in the distribution of specialty food products, currently carries a Zacks Rank #2 (Buy). CHEF has a trailing four-quarter earnings surprise of 3.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal-year sales and earnings suggests growth of 8.7% and 4.7%, respectively, from the year-ago reported numbers.

Vital Farms Inc. VITL offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter average earnings surprise of 155.4%.

The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 21.8% and 35.6%, respectively, from the year-ago reported numbers.

Utz Brands Inc. UTZ manufactures a diverse portfolio of salty snacks, currently carrying a Zacks Rank #2. UTZ has a trailing four-quarter earnings surprise of 2.6% on average.

The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 19.3% from the year-ago reported numbers.

Zacks Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The Chefs' Warehouse, Inc. (CHEF) : Free Stock Analysis Report

Post Holdings, Inc. (POST) : Free Stock Analysis Report

Vital Farms, Inc. (VITL) : Free Stock Analysis Report

Utz Brands, Inc. (UTZ) : Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.