Post Holdings, Inc. has recently experienced a significant surge, bolstered by its strong pricing actions and the resilient performance of its Post Consumer Brands. This consumer packaged goods company has strategically positioned itself for growth, thanks to its portfolio strength fortified by astute acquisitions.
Over the past three months, the Zacks Rank #1 (Strong Buy) stock has soared by 22.7%, outstripping the industry’s 4.3% growth. Moreover, it has comfortably surpassed the Zacks Consumer Staples sector’s 4% growth during this period.
To unlock more insights, you can check out the complete list of today’s Zacks #1 Rank stocks.
Let’s take a closer look at the drivers behind this remarkable performance.
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Pricing & Brand Strength Fuel Growth
Post Holdings has been reaping the benefits of strategic pricing actions, effectively countering inflationary pressures. This trend persisted in the first quarter of fiscal 2024, with both the top and bottom lines witnessing year-over-year growth that surpassed the Zacks Consensus Estimate. The company’s performance in the Post Consumer Brands and Weetabix segments was bolstered by higher average net selling prices.
During the same quarter, Post Consumer Brands recorded net sales of $988.6 million, representing a robust 78.2% increase, predominantly fueled by $426.6 million in sales from acquisitions. The company’s pet food and grocery segment delivered impressive results, with the pet food business exhibiting solid manufacturing performance and the grocery business benefitting from carryover pricing. With segment profit showing significant growth and adjusted EBITDA on the rise, this underscores the strong operational performance and acquisition synergies.
Acquisitions as a Growth Catalyst
Post Holdings has strategically leveraged acquisitions to expand its customer base. Notable acquisitions include Perfection Pet and a select pet food brand from The J.M. Smucker Co. Such strategic moves have positioned the company for a compelling entry into the burgeoning pet food category. Additionally, the acquisition of Deeside Cereals in December 2023 has further amplified the company’s Weetabix segment. In the first quarter of fiscal 2024, the company’s net sales included $428.9 million from acquisitions.
These well-executed expansion endeavors, coupled with other growth initiatives, are likely to continue shaping POST’s growth trajectory.
Other Promising Stocks
Apart from Post Holdings, several other stocks in the market show promise. Mondelez International (MDLZ) has a trailing four-quarter earnings surprise of 8.6%, on average, and carries a Zacks Rank #2.
Vital Farms Inc. (VITL) offers a range of pasture-raised foods and also carries a Zacks Rank #2. Lambert Weston Holdings, Inc. (LW) is another promising stock that currently holds a Zacks Rank #2.
For investors seeking to capitalize on potential market opportunities, it’s worth exploring these burgeoning stocks.
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