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Post Holdings (POST) Up 2.3% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Post Holdings (POST - Free Report) . Shares have added about 2.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Post Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Post Holdings Q4 Earnings Miss Estimates, Sales Down
Post Holdings reported fourth-quarter fiscal 2020 results, with the top and the bottom line lagging the Zacks Consensus Estimate. Moreover, sales and earnings declined year over year.
The company witnessed an increase in demand for its products, which are sold online as well as through food, drug, mass and club thanks to the coronavirus outbreak-led higher at-home consumption. However, the Foodservice business has been adversely impacted by lower demand from full service restaurants, quick service restaurants, education, and travel and lodging amid the pandemic. Nevertheless, volumes in Foodservice improved in the second half of 2020 from April levels.
Q4 in Detail
Adjusted earnings were 58 cents per share, which lagged the Zacks Consensus Estimate of 74 cents. This compares unfavorably with earnings of $1.43 per share reported in the year-ago quarter.
The company registered sales of $1,411.3 million, down 2.2% from $1,442.8 million reported in the prior-year quarter. Moreover, the figure missed the consensus mark of 1,435.5 million. The downside was caused by decline in the Foodservice business and Post Consumer Brands. Nevertheless, net sales growth in BellRing Brands, Weetabix and Refrigerated Retail offered some respite.
Further, gross profit of $440.3 million declined from $452.2 reported in the year-ago quarter. Gross margin contracted 10 basis points (bps) to 31.2% in the quarter under review. Meanwhile, the company witnessed SG&A expenses of $229.8 million, down from $245.5 in the year-ago quarter. SG&A expenses, as a percentage of sales, contracted 70 bps to 16.3% in the reported quarter.
Post Holdings generated operating profit of $178.9 million in the reported quarter. This depicts a surge of 74.4% from $102.6 million in the year-ago quarter. Adjusted EBITDA declined 9.5% to $274.8 million from $303.6 million in the prior-year quarter thanks to a sluggish foodservice business.
Segment Details
Post Consumer Brands: Sales in the segment declined 3.2% year over year to $471.9 million in the quarter. Volumes fell 6.3% owing to declines in private label and government bid business, Malt-O-Meal bag cereal and licensed brand cereal. These were somewhat offset by growth in Post branded cereals. Also, lower promotional spending and favorable mix partially offset impact of the reduced volume. Segmental profit was $92.9million, up 6.5% from the prior-year quarter’s levels.
Weetabix: Segmental sales increased 8.5% to $113.7 million in the reported quarter. Volumes increased to the tune of 5%. Volumes growth was driven by gains from extruded products and biscuit products. These were somewhat offset by declines in drink products stemming from lower on-the-go consumption amid the COVID-19 pandemic. Segmental profit of $28 million increased 9.8% year over year.
Foodservice: Sales slumped 23.3% to $320.5 million in the quarter under review, which included a 290 basis points benefit from Henningsen. Volumes declined 22.7% due to reduced away-from-home demand amid COVID-19 in various foodservice channels like full service restaurants, quick service restaurants, lodging, education and travel. Segmental loss was $4.9 million, down significantly on a year-over-year basis.
Refrigerated Retail: Sales in the segment were $223.4 million, up 2% from the year-ago quarter’s levels. Average net pricing was favorable during the quarter. Volumes declined 5.5% year over year thanks to declines in egg and cheese products. Segmental profit of $27.1 million improved 21.5% year over year.
BellRing Brands: Sales amounted to $282.6 million, up 31.7% year over year. Sales in Premier Protein brand was up 37.2%, while volumes increased 40.6%. Net sales improved on the back of RTD shake distribution gains, higher promotional activity and lapping a reduction in customer trade inventory levels in the year-ago quarter. Also, increase in customer trade inventory levels were a reason. Moreover, sales in Dymatize and PowerBar brands increased 14.5% and 1%, respectively. Segmental profit of $49 million increased 21.6%.
Financial Details
The company concluded the quarter with cash and cash equivalents of $1,187.9 million, long-term debt of $6,959 million and total shareholders’ equity of $2,829 million.
Cash provided by operating activities was $625.6 million at year ended Sep 30, 2020. During the quarter under review, Post Holdings bought back 1.5 million shares worth $125.5 million. At the end of the quarter, the company had $289.5 million remaining under its share repurchase authorization.
Outlook
Assuming that the pandemic persists through second-quarter fiscal 2021, management expects adjusted EBITDA in the range of $520-$550 million for the first half of fiscal 2021. This is anticipated to favor the fiscal first quarter.
The company expects capital expenditures to be between $225 million and $250 million in fiscal 2021, including nearly $4million attributable to BellRing.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -25.66% due to these changes.
VGM Scores
At this time, Post Holdings has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Post Holdings has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Post Holdings (POST) Up 2.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Post Holdings (POST - Free Report) . Shares have added about 2.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Post Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Post Holdings Q4 Earnings Miss Estimates, Sales Down
Post Holdings reported fourth-quarter fiscal 2020 results, with the top and the bottom line lagging the Zacks Consensus Estimate. Moreover, sales and earnings declined year over year.
The company witnessed an increase in demand for its products, which are sold online as well as through food, drug, mass and club thanks to the coronavirus outbreak-led higher at-home consumption. However, the Foodservice business has been adversely impacted by lower demand from full service restaurants, quick service restaurants, education, and travel and lodging amid the pandemic. Nevertheless, volumes in Foodservice improved in the second half of 2020 from April levels.
Q4 in Detail
Adjusted earnings were 58 cents per share, which lagged the Zacks Consensus Estimate of 74 cents. This compares unfavorably with earnings of $1.43 per share reported in the year-ago quarter.
The company registered sales of $1,411.3 million, down 2.2% from $1,442.8 million reported in the prior-year quarter. Moreover, the figure missed the consensus mark of 1,435.5 million. The downside was caused by decline in the Foodservice business and Post Consumer Brands. Nevertheless, net sales growth in BellRing Brands, Weetabix and Refrigerated Retail offered some respite.
Further, gross profit of $440.3 million declined from $452.2 reported in the year-ago quarter. Gross margin contracted 10 basis points (bps) to 31.2% in the quarter under review. Meanwhile, the company witnessed SG&A expenses of $229.8 million, down from $245.5 in the year-ago quarter. SG&A expenses, as a percentage of sales, contracted 70 bps to 16.3% in the reported quarter.
Post Holdings generated operating profit of $178.9 million in the reported quarter. This depicts a surge of 74.4% from $102.6 million in the year-ago quarter. Adjusted EBITDA declined 9.5% to $274.8 million from $303.6 million in the prior-year quarter thanks to a sluggish foodservice business.
Segment Details
Post Consumer Brands: Sales in the segment declined 3.2% year over year to $471.9 million in the quarter. Volumes fell 6.3% owing to declines in private label and government bid business, Malt-O-Meal bag cereal and licensed brand cereal. These were somewhat offset by growth in Post branded cereals. Also, lower promotional spending and favorable mix partially offset impact of the reduced volume. Segmental profit was $92.9million, up 6.5% from the prior-year quarter’s levels.
Weetabix: Segmental sales increased 8.5% to $113.7 million in the reported quarter. Volumes increased to the tune of 5%. Volumes growth was driven by gains from extruded products and biscuit products. These were somewhat offset by declines in drink products stemming from lower on-the-go consumption amid the COVID-19 pandemic. Segmental profit of $28 million increased 9.8% year over year.
Foodservice: Sales slumped 23.3% to $320.5 million in the quarter under review, which included a 290 basis points benefit from Henningsen. Volumes declined 22.7% due to reduced away-from-home demand amid COVID-19 in various foodservice channels like full service restaurants, quick service restaurants, lodging, education and travel. Segmental loss was $4.9 million, down significantly on a year-over-year basis.
Refrigerated Retail: Sales in the segment were $223.4 million, up 2% from the year-ago quarter’s levels. Average net pricing was favorable during the quarter. Volumes declined 5.5% year over year thanks to declines in egg and cheese products. Segmental profit of $27.1 million improved 21.5% year over year.
BellRing Brands: Sales amounted to $282.6 million, up 31.7% year over year. Sales in Premier Protein brand was up 37.2%, while volumes increased 40.6%. Net sales improved on the back of RTD shake distribution gains, higher promotional activity and lapping a reduction in customer trade inventory levels in the year-ago quarter. Also, increase in customer trade inventory levels were a reason. Moreover, sales in Dymatize and PowerBar brands increased 14.5% and 1%, respectively. Segmental profit of $49 million increased 21.6%.
Financial Details
The company concluded the quarter with cash and cash equivalents of $1,187.9 million, long-term debt of $6,959 million and total shareholders’ equity of $2,829 million.
Cash provided by operating activities was $625.6 million at year ended Sep 30, 2020. During the quarter under review, Post Holdings bought back 1.5 million shares worth $125.5 million. At the end of the quarter, the company had $289.5 million remaining under its share repurchase authorization.
Outlook
Assuming that the pandemic persists through second-quarter fiscal 2021, management expects adjusted EBITDA in the range of $520-$550 million for the first half of fiscal 2021. This is anticipated to favor the fiscal first quarter.
The company expects capital expenditures to be between $225 million and $250 million in fiscal 2021, including nearly $4million attributable to BellRing.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -25.66% due to these changes.
VGM Scores
At this time, Post Holdings has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Post Holdings has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.