Why Post Holdings (POST) Stock Is Down Today

NEW YORK (TheStreet) -- Post Holdings (POST) was falling -9.5% to $47.12 Friday after missing analysts' estimates for earnings and revenue in the fiscal second quarter.

For the fiscal second quarter Post reported a loss of -21 cents a share, missing analysts' estimates of 23 cents a share by 44 cents. Revenue grew 77% from the year-ago quarter to $438 million. Analysts surveyed by Thomson Reuters expected revenue of $448 million for the quarter.

The quarterly loss is largely due to charges related to acquisitions and other one-time items. Post closed three acquisitions in the fiscal second quarter: Dakota Growers Pasta Company, Golden Boy Foods and Dymatize Enterprises.

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TheStreet Ratings team rates POST HOLDINGS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate POST HOLDINGS INC (POST) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 2.3%. Since the same quarter one year prior, revenues rose by 25.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • Net operating cash flow has slightly increased to $24.90 million or 5.50% when compared to the same quarter last year. Despite an increase in cash flow of 5.50%, POST HOLDINGS INC is still growing at a significantly lower rate than the industry average of 58.43%.
  • 44.65% is the gross profit margin for POST HOLDINGS INC which we consider to be strong. Regardless of POST's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, POST's net profit margin of -0.80% significantly underperformed when compared to the industry average.
  • POST HOLDINGS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, POST HOLDINGS INC reported lower earnings of $0.29 versus $1.44 in the prior year. This year, the market expects an improvement in earnings ($0.67 versus $0.29).
  • You can view the full analysis from the report here: POST Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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