A month has gone by since the last earnings report for Post Holdings (POST). Shares have lost about 5.5% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Post Holdings due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Post Holdings Q1 Earnings & Revenues Lag Estimates
Post Holdings reported first-quarter fiscal 2020 results, wherein both top andbottom lines missed the Zacks Consensus Estimate. Also, the bottom line declined year over year, while sales grew.
Adjusted earnings were 76 cents per share, missing the Zacks Consensus Estimate of $1.14 in the first quarter. Also, the figure decreased 31.5% from the year-ago quarter.
The company registered sales of $1,456.8 million, reflecting a rise of 3.2% from $1,411.3 million in the prior-year quarter. However, the figure lagged the consensus mark of 1,463 million.
Further, gross profit of $471.5 million grew 10.6% from $426.5 million in the year-ago quarter. Meanwhile, gross margin expanded 220 basis points (bps) to 32.4% in the quarter under review.
Moreover, the company witnessed SG&A expenses of $235.3 million, up 8.4% from $217.1 in the year-ago quarter. SG&A expenses, as a percentage of sales, expanded 80 bps to 16.2% in the reported quarter.
Post Holdings generated operating profit of $196 million in the reported quarter. This depicts a decline of 33.3% from $293.9 million in the year-ago quarter.
Adjusted EBITDA grew 3.6% to $303.1 million from $292.5 million in the prior-year quarter.
Post Consumer Brands: Sales in the segment fell 3.1% year over year to $441.2 million in the quarter. Volumes declined 3.4% due to increased promotional activity in the year-ago quarter coupled with customers’ shopping patterns.
Weetabix: Segmental sales inched up 0.6% to $101.5 million in the reported quarter. Volumes decline to the tune of 7.6%.
Foodservice: Sales grew 3.1% to $420.6 million in the quarter under review. Moreover, volumes grew 3% on increased egg and potato volumes.
Refrigerated Retail: Sales in the segment were $249.9 million, down 4.5% from the year-ago quarter. Further, volumes fell 7% due to side dish volume growth.
BellRing Brands: Sales of $244 million rose 31.3%, with volume growth of 38.4% in the reported quarter. The upside can be attributable to distribution gains for RTD protein shakes and solid average net selling prices.
On Jan 13, Post Holdings announced the termination of its deal with TreeHouse Foods, per which it was about to acquire the latter’s private label RTE cereal business.
Cash provided by operating activities was $108.4 million in the first quarter of fiscal 2020. Further, the company approved a new share repurchase program of $400 million on Dec 6, 2019, for two years. During the quarter under review, Post Holdings bought back 2.2 million shares worth $223.1 million. Following this, it had $367.9 million remaining under its new share-repurchase plan at the end of the first quarter.
Management reiterated its fiscal 2020 view, which includes a 100% contribution from BellRing but excludes contributions from 8th Avenue. Adjusted EBITDA for the fiscal year is still anticipated to be $1.22-$1.27 billion, expecting the second half of fiscal 2020 to be more favorable. Further, the company continues to expect capital expenditure of $240-$260 million.
For BellRing brands, management still anticipates sales of $1.0-$1.05 billion for fiscal 2020. Also, adjusted EBITDA is envisioned to be $192-$202 million along with capital expenditure of nearly $4 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -21.51% due to these changes.
Currently, Post Holdings has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren’t focused on one strategy, this score is the one you should be interested in.