Post Holdings Surges 31% YTD: What Lies Ahead for the Stock?

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Post Holdings, Inc. POST has demonstrated impressive performance in the stock market this year. With a year-to-date (YTD) gain of 31.4%, POST has significantly outperformed the Zacks Food - Miscellaneous industry's growth of 2.3%. It has also surpassed the broader Consumer Staples sector, which increased 9.1% and the S&P 500, which grew 18.4% in the same period.

Closing at $115.77 on Friday, the stock stands close to its recently achieved 52-week high of $117.24, indicating impressive momentum.

In the past 30 days, the Zacks Consensus Estimate for earnings for the current fiscal year has risen 4.2% to $5.95 per share. The consensus mark implies a growth of 11.4% from the year-ago level, highlighting the company’s potential. The consensus estimated figure for the next fiscal year indicates year-over-year growth of 5.9%. 

The Zacks Consensus Estimated figures for sales imply an increase of 12.7% and 1.2% for the current and next fiscal year, respectively.

The question that arises here is whether it is prudent to buy POST’s shares after the recent rally. Let’s take a look at the company’s underlying opportunities for growth and challenges that could impact its future trajectory.

Zacks Investment Research
Zacks Investment Research


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Uncovering the Opportunities for POST

The leading consumer-packaged goods company is reaping the benefits attributed to several factors, including strategic acquisitions, effective cost management and strong operational performance despite challenging market conditions. The company's ability to navigate inflationary pressures and enhance its portfolio through acquisitions and strategic investments has contributed to this bullish momentum. 

Post Holdings has been benefitting from carryover pricing and operational efficiencies, particularly in the pet food and grocery divisions, which have been supported by strong manufacturing capabilities. This trend continued into the third quarter of fiscal 2024, as evidenced by year-over-year increases in both top and bottom lines’ performance. 

The company is capitalizing on the robust performance of the Post Consumer Brands segment, with sales increasing 15.7% year over year in the third quarter of 2024. POST’s grocery business gained from carryover pricing and strong operating cost performance. The pet food business remained stable and consistent across all brands, with strong manufacturing performance being a key contributor to its results.

Strategic acquisitions have played a crucial role in expanding Post Holdings' market reach and strengthening its market position. Notable acquisitions in 2023, including Perfection Pet a portion of The J. M. Smucker Company’s pet food business and Deeside Cereals, have significantly diversified the company's revenue streams and enhanced its portfolio. These acquisitions have been pivotal in driving growth and reinforcing its competitive edge in the consumer packaged goods sector.