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POST STOCK WRITE UP


POST (POST HOLDINGS)

  • P/E: 127.4
  • GAAP DILUTED Y-O-Y GROWTH LAST QUARTER: $1.07
  • SECTOR: CONSUMER NON-DURABLES
  • ASSETS-LIABILITIES: 148
  • DIVIDEND: NONE

Although famous primarily for its cereal, Post is rapidly expanding its business. Utilizing cost-cutting techniques in combination with the innovation of popular products, the company experienced exponential growth in its most recent quarter. Post has an opportunity to grow in competition with other US cereal leaders Kellogg, and General Mills.
Post has only 1 cereal in the top 10 best-selling cold cereals and 2 in the top 10 best-selling warm cereals, and produces less than half the revenue of Kellogg last year. However, Post is diversifying its product base with the introduction of Premier Protein, and the expansion of its Dymatize protein powder. Dymatize is a leading brand in the whey protein market geared towards bodybuilders, while Premier Protein is marketed to casual fitness enthusiasts. Post also owns a successful brand of cage free egg whites. Consequently, Post is experiencing sales growth in the burgeoning low-fat protein supplement market. Post acquired weetabix, which will substantially increase its market share and profit in the cereal market. However, weetabix is an established brand and not a newer, growing brand.
For the most recent quarter, the company delivered a 2% reduction in costs, while still delivering an increase in revenue. Consequently, the company's Active Nutrition segment increased over 200% in profit, while its primary Post segment increased just under 30% in profit. The company's Michael Foods Group declined due to market conditions and a lack of expansion in the segment.
Post has an excellent assets-liabilities ratio, giving it the opportunity to innovate even further than it has already with its on-hand cash. The company has an extremely high P/E currently calculated at 127.4, but boasts a forward P/E of only 26.8 according to Gurufocus. Its solid track record of earnings growth, developed brand presence, and innovation have lead to steady growth since its low of 58 in 1/2016.

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