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Post Holdings Announces Its Plans to Meet Consumer Demand

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Price movement

Post Holdings (POST) has a market cap of $5.6 billion. It rose by 1.8% to close at $86.48 per share on August 29, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 1.2%, -0.22%, and 40.2%, respectively, on the same day. POST is trading 2.5% above its 20-day moving average, 3.1% above its 50-day moving average, and 20.8% above its 200-day moving average.

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Related ETF and peers

The iShares Morningstar Mid Core ETF (JKG) invests 0.34% of its holdings in Post Holdings. The ETF tracks a market-cap-weighted index of US mid-cap companies that exhibit both growth and value characteristics as determined by multifactor selection. The YTD price movement of JKG was 10.3% on August 29.

The market caps of Post Holdings’ competitors are as follows:

  • Kellogg (K) — $29.3 billion
  • TreeHouse Foods (THS) — $5.4 billion
  • B&G Foods (BGS) — $3.2 billion

Latest news on Post Holdings

Post Holdings’ Michael Foods business is converting an egg layer farm located in Bloomfield, Nebraska to a cage-free operation to meet the consumer demand for cage-free eggs and products.

The company stated that “the project, which is expected to occur from spring 2017 through 2020, calls for replacing the existing 32 layer barns at the farm with 12 cage-free houses. The new layer houses will feature the latest technology in ventilation, lighting and manure-handling equipment, combined with modern housing systems that give layer hens more space and allow them to engage in natural bird behaviors.”

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Post Holdings’ results for fiscal 3Q16

Post Holdings reported fiscal 3Q16 net sales of $1.3 billion, a rise of 3.3% over its net sales of $1.2 billion in fiscal 3Q15. Net sales of Post’s consumer, active nutrition, and private brands rose by 21.7%, 1.5%, and 0.88%, respectively, and net sales of its Michael Foods Group fell by 8.3% between fiscals 3Q15 and 3Q16.

The company’s gross profit margin and operating profit rose by 22.4% and 74.7%, respectively, between fiscals 3Q15 and 3Q16. It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $231.0 million in fiscal 3Q16, a rise of 23.2% from fiscal 3Q15.

Its net income and EPS (earnings per share) fell to $0.0 million and $0.0, respectively, in fiscal 3Q16, compared with $19.8 million and $0.33, respectively, in fiscal 3Q15. It reported adjusted EPS of $0.62 in fiscal 3Q16, compared with $0.27 in fiscal 3Q15.

POST’s cash and cash equivalents and inventories rose by 22.8% and 9.3%, respectively, between fiscals 4Q15 and 3Q16. Its current ratio rose to 3.2x and its debt-to-equity ratio fell to 2.06x in fiscal 3Q16, compared with 2.9x and 2.10x, respectively, in fiscal 4Q15.

Projections

The company has made the following projections for fiscal 2016:

  • adjusted EBITDA in the range of $915 million–$925 million
  • capital expenditure in the range of $135 million–$145 million, including ~$15 million related to integration activities and ~$15 million related to growth activities
  • maintenance capital expenditure in the range of $105 million–$115 million

Next, we’ll look at Mondelēz International (MDLZ).

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