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Bear of the Day: Post Holdings, Inc. (POST)

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Post Holdings (POST - Free Report) is fighting to adapt to changing eating habits and broader consumer trends. The consumer packaged goods giant’s revenue has fallen in six out of the last eight quarters and its earnings outlook took a turn for the worse after it reported disappointing fourth quarter FY20 results on November 19.  

Soggy Performance?

Post Holdings is a consumer packaged goods firm that operates five core businesses: Post Consumer, Weetabix, Foodservice, Refrigerated Retail, and BellRing. Overall, its offerings range from Honey Bunches of Oats cereal to potatoes, sausages, and more under the Bob Evans brand to PowerBar and beyond.

The firm’s largest segment is its Post Consumer Brands, which features its North American ready-to-eat cereal offerings. The unit accounted for roughly 34% of total 2020 revenue and it climbed roughly 4% on the year. This helped Post’s overall 2020 revenue pop 0.3%. Unfortunately, the firm’s marginal climb followed a 9% decline in FY19.

On top of that, Post fell short of both our Q4 revenue and earnings estimates. Post’s sales dipped over 2% and its adjusted EPS came in 60% below the year-ago figure and missed by over 20%. As we mentioned at the top, the company has now seen its sales decline in six out of the last eight quarters.

 

 

 

 

 

 

 

 

 

 

 

Other Fundamentals…

Post’s stock price reflects its recent lackluster performance. The stock is down around 9% since mid-November, with its shares having moved largely sideways over the last six months. At $94 a share, POST sits around 16% off its April 2019 highs. That said, the stock has still climbed by around 40% in the last five years to crush the broader food market’s slight decline.

Unfortunately, this falls well behind the S&P 500’s 80% expansion during this run. Post also doesn’t pay a dividend and its Food–Miscellaneous space sits in the bottom quarter of over 250 Zacks industries.

Zacks estimates call for the company’s adjusted first quarter FY21 earnings to slip 16% on 3% lower revenue. On top of that, Post’s earnings outlook has trended heavily in the wrong direction since its fourth quarter report on November 19, with its EPS consensus down 21% for this year and 16% for FY22.  

 

 

 

 

 

 

 

Bottom Line

Post’s downward earnings revisions help it land a Zacks Rank #5 (Strong Sell) at the moment, alongside its “D” grade for momentum in our Style Scores system.

All that said, the company’s sales and earnings are projected to climb this year and next. Yet, it still might be best to stay away from Post until it shows some signs of a comeback, with it down 14% in the past 12 months and 9% since mid-November.

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Post Holdings, Inc. (POST) - free report >>