Yahoo Finance Post Holdings' (POST) Growth Aided by Foodservice and Pricing
Post Holdings, Inc. POST is expanding its presence through acquisitions. This consumer-packaged goods company continues to benefit from smart price decisions and solid performance in its Foodservice business.
These positive trends were evident in the company's first-quarter fiscal 2023 results, with both top and bottom lines increasing year over year and surpassing the Zacks Consensus Estimate.
Foodservice Business: Key Driver
Strength in the food service industry is advantageous for Post Holdings. Foodservice sales rose 36.9% to $600.5 million in the first quarter of fiscal 2023. Revenues reflect the effects of inflation-driven pricing actions, the impact of commodity cost pass-through pricing models and avian influenza-driven pricing efforts.
The segment’s volume increased by 4.4% in the said period. Also, the segment’s adjusted EBITDA increased by 163.9% to $109 million thanks to higher average net pricing and volume growth. Management highlighted that its Foodservice business has recovered from COVID-19 and is now profitable.
A Look at Q1 & Other Upsides
Post Holdings reported adjusted earnings from continuing operations of $1.08 per share in the first quarter of fiscal 2023, up from the 29 cents reported in the same period of the previous year. POST’s sales increased by 17.1% to $1,566.3 million.
Pricing changes across all market segments and ongoing volume recovery in the food service industry are responsible for the positive results. The Post Consumer Brands, Refrigerated Retail and Foodservice segments saw increases in sales for the company.
Image Source: Zacks Investment Research
This Zacks Rank #1 (Strong Buy) company has also been focusing on acquisitions, helping it expand its customer base. Recently, on Feb 8, 2023, Post Holdings acquired select pet food brands from The J.M. Smucker Co. This acquisition will help the company gain access to an entry point into the attractive and growing pet food categories. You can see the complete list of today’s Zacks #1 Rank stocks here.
Last year, in April, Post Holdings acquired Lacka Foods Limited. Lacka Foods is a UK-based marketer of high-protein, ready-to-drink shakes under the UFIT brand.
In February 2021, Post Holdings acquired Almark Foods (or Almark). Almark is known for its hard-cooked and deviled egg products and provides conventional, organic and cage-free products. Other major buyouts include PL RTE Cereal Business of TreeHouse Foods, Peter Pan peanut butter brand and Henningsen Foods, Inc., which forms part of its Foodservice segment.
Wrapping Up
Post Holdings shares have declined 2.6% in the past three months compared with the industry’s fall of 0.6%. Although shares of the company have slid in the period mentioned above, this provides a good entry point given the stock’s attractive valuation, sound fundamentals and strategic initiatives. The stock currently has a Value Score of B.
3 Solid Picks
Some other top-ranked stocks are Inter Parfums IPAR, The Hershey Company HSY and General Mills, Inc. GIS.
IPAR has an expected long-term earnings growth rate of 15% and a trailing four-quarter earnings surprise of 36.2%, on average. Inter Parfums currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Inter Parfums’ current financial year sales and earnings suggests growth of 10.5% and 0.8%, respectively, from the year-ago reported numbers.
The Hershey Company is the largest chocolate manufacturer in North America and currently carries a Zacks Rank #2 (Buy). HSY has a trailing four-quarter earnings surprise of 11.3%, on average.
The Zacks Consensus Estimate for Hershey’s current financial year sales and earnings suggests growth of 7.7% and 10%, respectively, from the prior-year reported numbers.
General Mills, a global manufacturer and marketer of branded consumer foods sold through retail stores, currently carries a Zacks Rank #2. GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
The Zacks Consensus Estimate for General Mills’ current financial year sales and earnings suggests growth of 5.9% and 7.1%, respectively, from the corresponding year-ago reported figures.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Hershey Company (The) (HSY) : Free Stock Analysis Report
General Mills, Inc. (GIS) : Free Stock Analysis Report
Inter Parfums, Inc. (IPAR) : Free Stock Analysis Report
Post Holdings, Inc. (POST) : Free Stock Analysis Report
