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Bear of the Day: Post Holdings (POST)

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Madeleine Johnson
·3 min read
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Based in Missouri, Post Holdings, Inc. (POST) is a consumer-packaged goods giant, with many popular ready-to-eat cereal brands like Honey Bunches of Oats, Pebbles, Raisin Bran, Shredded Wheat, and Oreo O’s under its umbrella.

Q4 Earnings Recap

Last November, Post reported fourth quarter results that came in weaker-than-expected.

Earnings of $0.58 per share missed the Zacks Consensus Estimate; revenue of $1.4 billion fell 2.2% year-over-year and also missed our consensus estimate.

The company’s Foodservice and Post Consumer Brands operating segments saw notable declines over the prior year period, while BellRing Brands, Weetabix, and Refrigerated Retail grew year-over-year.

Looking ahead, Post’s management team expects adjusted EBITDA for the first half of 2021 to be in the range of $520 million and $550 million.

Bottom Line

POST is now a Zacks Rank #5 (Strong Sell).

Four analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen 58 cents to $3.73 per share; earnings are expected to experience a double-digit decline for fiscal 2020. Post reports Q1 results in a few weeks, so investors should be aware that these figures could change.

Shares are down 11.8% in the past one-year period, lagging the S&P 500’s 14% rebound during the same time frame.

Post faces some tough headwinds going forward.

Competition from fellow cereal makers Kellogg (K) and General Mills (GIS) has only grown, and Post will likely have a hard time gaining significant market share as the demand for cereal by consumers remains at a stand still.

Long-term debt has also ballooned over the past ten years to $6.9 billion due to high acquisition activity, and with stagnant revenues and an unclear path to growing future earnings, it may be best for potential investors to stay on the sidelines for now.

Investors who are interested in adding a similar consumer staples stock to their portfolio could consider natural and organic food manufacturer Hain Celestial Group (HAIN). HAIN is a #1 (Strong Buy) on the Zacks Rank, and earnings are expected to grow over 50% for the current fiscal year.

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Post Holdings, Inc. (POST) : Free Stock Analysis Report
 
Kellogg Company (K) : Free Stock Analysis Report
 
The Hain Celestial Group, Inc. (HAIN) : Free Stock Analysis Report
 
General Mills, Inc. (GIS) : Free Stock Analysis Report
 
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