Post Holdings (POST - Snapshot Report) recently issued better than anticipated Earnings and Revenues where every segment exceeded expectations in Q315.  Specifically, the MOM Brand’s comparable sales grew 6.8% y/y, Michael Foods Group saw 0.9% sales growth y/y, the Active Nutrition segments saw 17% sales growth y/y, and the Private Label segment saw sales increase 4% y/y.  Further, due to these impressive sales numbers, management increased FY 15 guidance from a range of $585m - $610m to a range of $635m - $650m.  Therefore, Post Holdings is the Zacks Bull of the Day.

This Zacks Rank #1 (Strong Buy) company is a manufacturer, marketer and distributor of branded ready-to-eat cereals in the United States and Canada. The Company's products are manufactured through a production platform consisting of four owned primary facilities and sold through a variety of channels such as grocery stores, mass merchandisers, club stores, and drug stores. Its portfolio of brands includes diverse offerings such as Honey Bunches of Oats, Pebbles, Post Selects, Great Grains, Spoon Size Shredded Wheat, Post Raisin Bran, Grape-Nuts and Honeycomb. Post Holdings Inc. is based in St. Louis, Missouri.

In mid-part of the quarter, the Avian Influenza outbreak seemed to loom large over the Michael Foods segment (the segment is one of the largest egg suppliers in the country, and accounts for 47% of total sales in foodservice products). It was estimated that the outbreak impacted about 25% of POST’s total egg supply.  According to management, “As a result of aggressive cost management, pricing actions and close supply chain collaboration, the impact of the recent avian influenza outbreak on third quarter financial results for the Michael Foods egg business was mitigated.”

Increasing Estimates

As you can see in the graph below, 2013 and 2014 were difficult for the company, but in 2015 the company saw nice price appreciation from the beginning of the year to the present due to their recent outstanding performances.  

Over the past 7 days estimates for Q4 15, Q1 16, FY 15, and FY 16 have all increased; Q4 15 rose from $0.17 to $0.32, Q1 16 improved from $0.18 to $0.23, FY 15 almost doubled from $0.34 to $0.65, and FY 16 jumped from $1.18 to $1.55.  

Further, these estimates anticipate massive y/y growth; Q4 15 growth of 148%, Q1 16 growth of 119%, FY 15 growth of 253%, and FY 16 growth of 139%.  These are just outstanding growth levels expected over the next quarter and into 2016.

Bottom Line

As the worries about the Avian influenza outbreak have subsided, the company is now poised to grow over the next few quarters.  Further, in early August management completed their debt offering and new equity issuance.  The equity issuance resulted in net proceeds of about $370 million, and the debt offering improved their balance sheet flexibility with their new long-term notes.  This financial transaction has fueled rumors that Post Holdings will be acquiring another company; it is suspected that Post will be bidding on ConAgra’s Private Brands business (the biggest one currently for sale), or another branded business.  

With improving sales, and strong implied growth over the next few quarters, Post Holdings is the Zacks Bull of the Day.