Post Holdings (POST) Marked As A Barbarian At The Gate

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 "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) 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 $23.4 million.
  • POST has traded 154,539 shares today.
  • POST traded in a range 234.3% of the normal price range with a price range of $2.38.
  • POST traded above its daily resistance level (quality: 12 days, meaning that the stock is crossing a resistance level set by the last 12 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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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 is 1 analyst that rates Post Holdings a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Post Holdings has been 755,600 shares per day over the past 30 days. Post has a market cap of $1.6 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.91 and a short float of 38.4% with 17.39 days to cover. Shares are down 25.4% 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 sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and generally high debt management risk.

Highlights from the ratings report include:
  • 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, POST HOLDINGS INC reported lower earnings of $0.29 versus $1.44 in the prior year. For the next year, the market is expecting a contraction of 236.2% in earnings (-$0.40 versus $0.29).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food Products industry. The net income has significantly decreased by 1132.3% when compared to the same quarter one year ago, falling from $3.40 million to -$35.10 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Food Products industry and the overall market, POST HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for POST HOLDINGS INC is currently lower than what is desirable, coming in at 29.79%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -5.54% is significantly below that of the industry average.
  • The share price of POST HOLDINGS INC has not done very well: it is down 21.53% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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 could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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