Ralcorp Holdings, Inc.

Ralcorp Holdings, Inc. (RAH - Snapshot Report) is operating in a segment of the market that is proving to be resilient when consumers spend less. Estimates are up and the company's share prices has been advancing since early July.

Company Description

Ralcorp Holdings, through its subsidiaries, manufactures and distributes store-brand food products. The company has a market cap of $1.70 billion and is based in St. Louis, Missouri.

Resiliant Earnings

Ralcorp is proving to be resilient in a challenging market, scoring big gains in both revenue and income in its most recent quarter, reported in late July. Revenue was up 13% to $658.6 million. Profit sky-rocketed, jumping 295% to $45.8 million. This produced earnings of $1.73 per share, easily outpacing estimates of $1.21.

Ralcorp booked a gain of $21.7 million, or 53 cents per share, on a forward sales contract related to its investment in Vail Resorts (MTN - Snapshot Report).

Ralcorp's core business in food and snacks is holding up well at a time when the credit markets are tight and consumers are strapped for cash and spending less.

Analyst Estimates

Because of this dynamic, analysts remain bullish on the company. The current-year estimate is up 3 cents in the last week to $3.65 per share. The next-year estimate is projecting 16% earnings growth.

In order to hit these numbers Ralcorp will have to deftly navigate volatile commodities markets. The company carries heavy exposure to input costs like corn and wheat.

Valuations

Based upon the current-year estimate, this stock has a forward P/E multiple of 18X. This is a premium to the overall market but stocks from this segment of the market have recently become more attractive to investors seeking shelter from volatility in other areas of the market.

The Chart

Shares of RAH have been advancing along a trend line since early July, climbing from less than $50 to $66. The short-term high is at $74. Take a look below.

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