Post Holdings, Inc. POST is propelled by strategic initiatives amid a volatile consumer landscape marked by inflation, evolving preferences, and heightened competition in the staples sector. The company’s established brand presence enables it to maintain a stable market position in the sector known for steady demand, as consumer staples are essential in daily life.

A major factor behind this success was the Post Consumer Brands segment, which experienced a 15.7% year-over-year increase in net sales, largely driven by $428.9 million from acquisitions. 

Over the past three months, POST’s stock has gained 12%, outpacing the industry’s growth of 7.3%.

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Factors Driving Post Holdings’ Momentum

Post Holdings has been capitalizing on strategic pricing actions to offset inflationary pressures, a trend that persisted in the third quarter of fiscal 2024. The company’s top and bottom lines experienced growth, driven by higher average net selling prices, particularly in the Post Consumer Brands segment. This pricing strategy has played a critical role in bolstering the company's performance and is likely to remain a key driver of growth in the coming quarters.

Moving on to the Weetabix segment, it recorded notable growth of 1.4% in net sales, supported by the Deeside acquisition and a modest foreign currency tailwind of 80 basis points from a stronger British pound. This growth reflects the positive impact of strategic acquisitions and favorable currency movements.

Strategic acquisitions have been crucial for Post Holdings in broadening its market reach and solidifying its market position. In December 2023, Post Holdings acquired Perfection Pet, integrating it into its Post Consumer Brands segment. Additionally, on April 28, 2023, Post Holdings acquired a select pet food brand from The J.M. Smucker Co. This acquisition provides Post Holdings with a strategic entry into the burgeoning and lucrative pet food market, enhancing its presence in this growing category.
 
The third quarter of 2024 was marked by strong sales of branded and big cereal products, notable outperformance in the pet category against our underwriting case, and a substantial improvement in the value-added egg mix. It is envisioned that these favorable trends will continue throughout fiscal 2025.

POST Faces Some Concerns in the Near Term

Post Holdings has experienced a rise in SG&A costs over recent quarters. In the third quarter of fiscal 2024, SG&A expenses grew by 7.8%. This increase was due to ongoing targeted marketing investments in retail businesses. This increase was significantly influenced by the inclusion of Pet Food in the company's portfolio.

The Refrigerated Retail segment of Post Holdings reported a 7.1% decrease in net sales in the third quarter of fiscal 2024. Volumes decreased by 0.5%, and average net prices dropped due to increased trade promotions and a portfolio shift towards dinner sides. Adjusted EBITDA decreased by 37%, impacted by lower net pricing and higher selling costs.

While Post Holdings has demonstrated strong performance in certain areas, such as strategic pricing and acquisitions, challenges persist in segments like Refrigerated Retail. Maintaining positions in the stock appears prudent as it allows investors to stay engaged with the company while monitoring its ability to address current challenges and capitalize on growth opportunities.

Post Holdings currently carries a Zacks Rank #3 (Hold).