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Post Holdings Fundamental Analysis October 2023

Post Holdings Fundamental Analysis.

Post Holdings Fundamental Analysis. Based in Missouri, Post Holdings is a consumer goods management company involved in the production of packaged food products for the center store, refrigerated, food service, food ingredients, and value nutrition categories. It also deals with private-label food products.


Post Holdings fundamental analysis. The company operates in the following segments:

Post Consumer Brands (46.9% of total net sales in the third fiscal quarter) includes private label ready-to-eat cereal products. Some well-known brands of ready-to-eat cereals include Honey Bunches of Oats, Pebbles, Oreo O’s, Hostess Donettes, Hostess Honey Bun, Great Grains, Grape-Nuts, Post Shredded Wheat, Oh’s, Honeycomb, Golden Crisp, Post Raisin Bran, Alpha-Bits, Shreddies, and Malt-O-Meal branded cereals and Mom’s Best.

Weetabix (7.2%) includes the activities of Weetabix Limited and its direct subsidiaries. It produces and distributes branded and private label ready-to-eat cereals, hot cereals, and other cereal-based food products, breakfast drinks, and muesli mainly outside North America. Distribution is carried out through third-party services.

Foodservice (33.5%) is engaged in the production and distribution of egg and potato-based products in the foodservice and food ingredient sectors. It offers a wide range of egg-based products under brands like Papetti’s and Abbotsford Farms, and potato-based products under various brands, including Simply Potatoes.

Refrigerated Retail (12.4%) produces and distributes refrigerated products for retail sales, such as eggs, cheese, and sausages under brands like Michael Foods, Willamette, NPE, and Bob Evans. The segment’s potato-based products, refrigerated side dishes, and sausages are available under brands like Bob Evans, Bob Evans Farms, Simply Potatoes, Pineland Farms, Owens, and Diner’s Choice.





Based on Post Holdings fundamental analysis, we report the main reasons to buy the stock.


Post Holdings reported strong results in the third fiscal quarter of 2023. The company results improved in both revenues and profits compared to the previous year. These results reflect the benefits of price actions across all sectors to combat rising material and transportation costs. Adjusted operating income stood at $1.52 per share. It repreesents a significant increase from the 69 cents reported in the same quarter of the previous year. The company recorded sales of $1,859.4 million, a 21.9% increase from the previous year. During the quarter, the company saw sales growth in the Post Consumer Brands, Weetabix, and Foodservice segments. Weetabix segment sales increased by 7.4% from the previous year.

Gross margin amounted to $501.7 million in the third quarter of the fiscal year 2023. It means a 37.5% increase compared to the same quarter of the previous year. The gross margin expanded by 310 basis points to 27% in the quarter under consideration, supported by strong price actions. Post Holdings shares have outperformed the sector in the past three months. Indeed the company’s stock rised by 5.7% during this period, compared to the sector’s 7.1% decline. In the third quarter of 2023, management raised the outlook for 2023. Adjusted EBITDA is now expected to be in the range of $1.180-$1.200 million, up from the previous range of $1.090-$1.130 million. Post Holdings shares decreased by 2% in the past three months, while the sector saw a 12.4% decline.


Post Consumer Brands Segment Performance: Post Holdings is experiencing significant growth in the Post Consumer Brands segment. In Q3 2023, the Post Consumer Brands segment witnessed a remarkable 51.6% surge in sales, reaching $871.3 million, which includes revenues generated from the pet food industry. Despite a 5.7% decrease in volumes, when excluding the impact of the pet food sector for the current year, this decline was partially offset by increased sales in our private label cereal offerings. The segment delivered a profit of $83 million, marking a 1.5% increase from the previous year’s equivalent period. Furthermore, the adjusted EBITDA for the segment reached $151.4 million in Q3 2023, representing a substantial 28.2% growth compared to the same period in the previous year.


Foodservice Sector Support in Q3 Results: Post Holdings is enjoying robust performance in its Foodservice sector. During the third quarter of 2023, the sector recorded a solid 7.5% increase in sales, totaling $622.7 million, surpassing the previous year. Notably, volumes experienced a 3.0% uptick, primarily driven by the escalating demand for out-of-home eggs and potatoes in the fiscal third quarter. Potato volumes exhibited significant growth at 6.8%, and egg volumes showed a commendable 2.3% increase. The sector achieved an impressive profit of $107.7 million, marking an outstanding 134.6% surge from the corresponding period the previous year. Additionally, the Foodservice segment reported an adjusted EBITDA of $144.5 million for the third quarter of 2023, signifying a remarkable 67.2% expansion compared to the same period in the previous year. It’s worth mentioning that the Foodservice sector has witnessed notable sales growth of 40.1% and 37% in the second and first quarters, respectively.


Acquisition Focus: Post Holdings has successfully leveraged its strategic focus on acquisitions, contributing to the expansion of its customer base. In a significant move, on April 28, 2023, Post Holdings announced the successful completion of its acquisition of a carefully selected pet food brand from The J.M. Smucker Co. This strategic acquisition positions Post Holdings to enter the thriving and profitable pet food sector.

Notably, on April 5, 2022, Post Holdings acquired Lacka Foods Limited, a UK-based company specializing in the marketing of high-protein ready-to-drink shakes under the UFIT brand.

Another milestone was achieved with the acquisition of Almark Foods (or Almark) on February 1, 2021. Almark, renowned for its high-quality hard-boiled and deviled egg products, offers a range of choices, including conventional, organic, and cage-free options.

Furthermore, on January 25, 2021, Post Holdings acquired the iconic Peter Pan peanut butter brand from Conagra Brands. On the same day, Post Holdings announced an exciting collaboration with Hungry Planet, a prominent plant-based meat company.

In a strategic move on July 1, 2020, Post Holdings completed the acquisition of Henningsen Foods, Inc., a valuable addition to its Foodservice segment.

Subsequently, in June 2021, the company proudly announced the finalization of the acquisition of TreeHouse Foods’ ready-to-eat cereal business.

Noteworthy in its growth journey, Post Holdings secured the acquisition of Bob Evans in January 2018, significantly enhancing its presence in both the restaurant and refrigerated retail channels. Furthermore, the acquisition of Latimer Newco 2 Limited in July 2017 was pivotal, leading to the addition of Weetabix North America and Weetabix Limited to its diverse portfolio. The latter now operates as one of the company’s five distinctive business segments.


The cash flow generated from operating activities amounted to $480.5 million for the nine months ending on June 30, 2023. In the third quarter, Post Holdings repurchased 1.9 million shares for $166.8 million. Over the first nine months of the fiscal year 2023, the company repurchased 2.9 million shares for $250.5 million. As of July 31, 2023, the company had $278.5 million available for share repurchases.

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