Trade-Ideas: Post Holdings (POST) Is Today's

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.

Trade-Ideas LLC identified Post Holdings ( POST) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Post Holdings as such a stock due to the following factors:

  • POST has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $70.8 million.
  • POST has traded 93,533 shares today.
  • POST is up 3.1% today.
  • POST was down 15.9% yesterday.

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More details on POST:

Post Holdings, Inc. manufactures, markets, and distributes ready-to-eat cereals, snacks, and active nutrition products in the United States and Canada. Currently there are 2 analysts that rate Post Holdings a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Post Holdings has been 747,000 shares per day over the past 30 days. Post has a market cap of $1.7 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.98 and a short float of 26.2% with 4.41 days to cover. Shares are down 9.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Post Holdings as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • POST's very impressive revenue growth greatly exceeded the industry average of 3.0%. Since the same quarter one year prior, revenues leaped by 146.0%. 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.
  • Net operating cash flow has increased to $56.00 million or 17.64% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 3.81%.
  • 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 ($0.62 versus $0.29).
  • In its most recent trading session, POST has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.
  • The debt-to-equity ratio of 1.49 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, POST has managed to keep a strong quick ratio of 1.68, which demonstrates the ability to cover short-term cash needs.

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