Stock Story -
Packaged foods company Post (NYSE:POST) missed analysts' expectations in Q2 CY2024, with revenue up 4.7% year on year to $1.95 billion. It made a non-GAAP profit of $1.54 per share, improving from its profit of $1.52 per share in the same quarter last year.
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Post (POST) Q2 CY2024 Highlights:
- Revenue: $1.95 billion vs analyst estimates of $2.02 billion (3.4% miss)
- EPS (non-GAAP): $1.54 vs analyst estimates of $1.22 (26.5% beat)
- Gross Margin (GAAP): 29.6%, up from 27% in the same quarter last year
- Sales Volumes were flat year on year (-11% in the same quarter last year)
- Market Capitalization: $6.63 billion
Shelf-Stable FoodAs America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.
Sales GrowthPost is one of the larger consumer staples companies and benefits from a well-known brand, giving it customer mindshare and influence over purchasing decisions.
As you can see below, the company's annualized revenue growth rate of 13.9% over the last three years was solid for a consumer staples business.
This quarter, Post's revenue grew 4.7% year on year to $1.95 billion, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 3.9% over the next 12 months, a deceleration from this quarter.
Volume Growth Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
Post's average quarterly sales volumes have shrunk by 7.4% over the last two years. This decrease isn't ideal because the quantity demanded for consumer staples products is typically stable.
In Post's Q2 2024, year on year sales volumes were flat. This result was a well-appreciated turnaround from the 11% year-on-year decline it posted 12 months ago, showing the company is heading in the right direction.
Key Takeaways from Post's Q2 Results We enjoyed seeing Post exceed analysts' gross margin expectations this quarter. We were also excited its EPS outperformed Wall Street's estimates. On the other hand, its revenue unfortunately missed analysts' expectations. The market is likely focused on topline results, and the stock traded down 3.1% to $107 immediately following the results.
