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Post Holdings (POST) Gains on Favorable Pricing & Brand Strength
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Post Holdings, Inc. (POST - Free Report) is reaping benefits from a favorable pricing environment. Strength in the Post Consumer Brands is a key driver for this consumer-packaged goods company. POST undertakes strategic acquisitions to grow its portfolio. That being said, POST is not immune to an inflationary environment.
Let’s delve deeper.
Pricing & Brand Strength
Post Holdings has been benefiting from strategic pricing actions undertaken to counter inflationary headwinds. The trend continued in the first quarter of fiscal 2024, with the top and bottom lines 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.
In the fiscal first quarter, Post Consumer Brands’ net sales of $988.6 million surged 78.2%, primarily owing to gains 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. The segment’s profit registered 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.
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.
Hurdles on the Way
Post Holdings is operating amid a challenging macroeconomic environment. The company is witnessing persistent inflationary pressures in areas like sugar prices and labor costs. 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.
In addition, the company has been battling with rising selling, general and administrative (SG&A) costs for a while now. In the fiscal first quarter, SG&A expenses escalated 41.2% to $322.9 million, whereas as a percentage of net sales, the metric increased 180 basis points to 16.4% on targeted marketing investments, among other reasons. The persistence of the trend is concerning for the company. Focusing on the upsides mentioned above is likely to keep aiding the company’s performance.
The Zacks Rank #3 (Hold) stock has increased 10.6% in the past three months against the industry’s 1.3% decline.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 18.7% and 30.5%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - 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 19.3% from the year-ago reported numbers.
Celsius Holdings (CELH - Free Report) , which offers functional drinks and liquid supplements, currently carries a Zacks Rank #2. CELH has a trailing four-quarter earnings surprise of 67.4%, on average.
The Zacks Consensus Estimate for Celsius Holdings’ current financial-year sales and earnings suggests growth of 41.6% each from the year-ago reported figures.
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Post Holdings (POST) Gains on Favorable Pricing & Brand Strength
Post Holdings, Inc. (POST - Free Report) is reaping benefits from a favorable pricing environment. Strength in the Post Consumer Brands is a key driver for this consumer-packaged goods company. POST undertakes strategic acquisitions to grow its portfolio. That being said, POST is not immune to an inflationary environment.
Let’s delve deeper.
Pricing & Brand Strength
Post Holdings has been benefiting from strategic pricing actions undertaken to counter inflationary headwinds. The trend continued in the first quarter of fiscal 2024, with the top and bottom lines 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.
In the fiscal first quarter, Post Consumer Brands’ net sales of $988.6 million surged 78.2%, primarily owing to gains 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. The segment’s profit registered 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.
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.
Hurdles on the Way
Post Holdings is operating amid a challenging macroeconomic environment. The company is witnessing persistent inflationary pressures in areas like sugar prices and labor costs. 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.
In addition, the company has been battling with rising selling, general and administrative (SG&A) costs for a while now. In the fiscal first quarter, SG&A expenses escalated 41.2% to $322.9 million, whereas as a percentage of net sales, the metric increased 180 basis points to 16.4% on targeted marketing investments, among other reasons. The persistence of the trend is concerning for the company. Focusing on the upsides mentioned above is likely to keep aiding the company’s performance.
The Zacks Rank #3 (Hold) stock has increased 10.6% in the past three months against the industry’s 1.3% decline.
Top 3 Staple Picks
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2 (Buy). VITL has a trailing four-quarter average earnings surprise of 155.4%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 18.7% and 30.5%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - 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 19.3% from the year-ago reported numbers.
Celsius Holdings (CELH - Free Report) , which offers functional drinks and liquid supplements, currently carries a Zacks Rank #2. CELH has a trailing four-quarter earnings surprise of 67.4%, on average.
The Zacks Consensus Estimate for Celsius Holdings’ current financial-year sales and earnings suggests growth of 41.6% each from the year-ago reported figures.