Here’s why Post Holdings (POST) is a bet on the solid food industry

Post Holdings, Inc. POST is increasing its presence through acquisitions to enhance its portfolio. The consumer packaged goods company benefits from strategic pricing actions and strong performance across its foodservice business. These upsides were seen in first quarter results for fiscal 2023 with the cap and bottom line increasing year over year and beating the Zacks consensus estimate.

Let’s dig deeper.

Promising performance in the first quarter

In the first quarter of fiscal 2023, Post Holdings reported adjusted earnings from continuing operations of $1.08 per share, up from 29 cents reported in the prior year quarter. POST recorded $1,566.3 million in sales, up 17.1%. The upside can be attributed to pricing actions in each segment and continued volume recovery across the foodservice business. The company experienced sales growth in the post-consumer brands, retail chillers and foodservice segments.

We’ve been noticing that Post Holdings has been gaining steam from the foodservice business for a while. During the fiscal first quarter, foodservice sales increased 36.9% to $600.5 million.
Foodservice sales increased 36.9% and 33.1% in the fourth quarter and third quarter of fiscal year 2022, respectively, year over year.

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Prudent acquisitions help growth

Post Holdings is focused on acquisitions, which helps it expand its customer base. Recently, on February 8, 2023, Post Holdings acquired a select brand of pet food from the JM Smucker Company. This acquisition will help the company gain access to attractive and growing pet food categories.

In April last year, Post Holdings acquired Lacka Foods Limited. Lacka Foods is a UK marketer of ready-to-drink high protein shakes under the UFIT brand.

In February 2021, Post Holdings acquired Almark Foods (or Almark). Almark is known for its fine-cooked eggs and offers traditional, organic, and cage-free products. Other major acquisitions include the PL RTE Cereal Business of TreeHouse Foods, the Peter Pan peanut butter brand and Henningsen Foods, Inc. , which forms part of the food service sector.

wrapping

Shares of Zacks No. 1 (Strong Buy) are down 5.8% in the past three months compared to an industry decline of 8.2%. Although Post Holdings shares have declined in the aforementioned period, this provides a good entry point given the stock’s attractive valuation, sound fundamentals, and strategic initiatives. The stock currently has a score of B.

3 solid choices

Some of the other top rated stocks are: Inter perfume north, Kroger Corporation. KR and Deckers Outdoor Company deck.

Long-term expected IPAR earnings growth is 15% and fourth-quarter earnings surprise is 36.2% on average. Inter Parfums is currently ranked #1 by Zacks. You can see The full list of Zacks #1 stocks today is here.

A Zacks consensus estimate for Inter Parfums’ current fiscal year sales indicates growth of 10.8% over last year’s figures.

Kroger operates in the thin-margin grocery industry and is currently ranked #2 by the Zacks (Buy). KR has an expected quarterly earnings surprise of 9.8%, on average.

The Zacks consensus estimate for Kroger’s sales and earnings for the current fiscal year indicates growth of 2.5% and 6.2%, respectively, from the prior year’s reported numbers.

Deckers Outdoor Corporation is a leading designer, producer, and brand manager of specialty and innovative footwear, currently the number two Zacks brand. DECK has enjoyed a four-quarter earnings surprise of 31% on average.

The Zacks consensus estimate for Deckers’ sales and earnings for the current fiscal year indicates growth of 12.2% and 13.6%, respectively, compared to the numbers cited for the year ago.

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The Kroger Co. (KR): Free stock analysis report

Inter Parfums, Inc. (IPAR): Free Stock Analysis Report

Post Holdings, Inc. (POST): Free stock analysis report

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