Post Holdings, Inc. (POST Quick QuotePOST - Free Report) appears well-positioned, courtesy of its focus on prudent buyouts. The consumer-packaged goods company is benefiting from growing Post Consumer Brands. The company has been benefiting from strategic pricing actions undertaken to counter inflationary headwinds.

The trend continued in first-quarter fiscal 2024, with net sales and earnings increasing year over year and surpassing the Zacks Consensus Estimate. Higher average net selling prices drove the company’s performance in the Post Consumer Brands and Weetabix segments.

The Zacks Rank #1 (Strong Buy) stock has increased 16% in the past three months compared with the industry’s 3.5% growth. Let’s discuss the factors working in the company’s favor.

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.

Strong Post Consumer Brands

Post Holdings has been reaping benefits from growing Post Consumer Brands. In the fiscal first quarter, segmental net sales of $988.6 million surged 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 inflationary pressures in certain areas. Inflationary headwinds coupled with higher interest rates are straining consumer’s spending power. In addition, reduced benefit support among economically sensitive consumers is compelling shoppers to be selective with their purchases. That being said, focusing on the upsides mentioned above is likely to keep narrating POST’s growth story.

Other Solid Food Bets

The Chef’s Warehouse (CHEF Quick QuoteCHEF - Free Report) , 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 Quick QuoteVITL - Free Report) 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 18.6% and 35.6%, respectively, from the year-ago reported numbers.

Utz Brands Inc. (UTZ Quick QuoteUTZ - Free Report) 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 15.8% from the year-ago reported numbers.