Making Sense of Post Holding’s Risk Factors

Post Holdings (POST) is a consumer packaged goods holding company based in Missouri. It operates in the centre-of-the-store, foodservice, active nutrition, refrigerated, food ingredient, and private brand food categories. 

For its Fiscal Q4 2021, Post Holdings reported a 20% year-over-year increase in revenue to $1.7 billion and exceeded the consensus estimate of $1.65 billion. It posted adjusted EPS of $0.44, which fell from $0.77 in the same quarter of the previous year and was below the consensus estimate of $0.96.

Post Holdings anticipates adjusted EBITDA of about $1.16 – $1.20 billion for FY 2022 and will include full-year results from BellRing Brands.

With this in mind, we used TipRanks to take a look at the risk factors for Post Holdings.

Risk Factors

According to the new TipRanks Risk Factors tool, Post Holdings’ main risk category is Finance & Corporate, representing 41% of the total 51 risks identified for the stock. Production and Ability to Sell are the next two major risk categories, accounting for 18% and 14%, respectively, of the total risks.

In a newly added Finance & Corporate risk factor, POST informs investors that several of their directors are also the directors of related companies like 8th Avenue, PHPC, and BellRing. As a result, these directors may face conflicts of interest when faced with decisions involving the related companies. Such cases may affect relationships with investors and their confidence in the company.

The company informs investors that it publishes guidance regarding the future performances of some or all of its subsidiaries. The guidance report is prepared by management and is based on a number of assumptions that are subject to change. Actual results may vary from the guidance provided. Similarly, the guidance reports of BellRing and PHPC are prepared by their own management teams, and Post Holdings is not responsible for their statements. 

In a third newly added risk factor, the company informs investors that the transaction agreement with BellRing is subject to certain conditions set in the agreement. Post Holdings does not guarantee that the conditions will be met. The company does not know if it will be able to realize the potential of the BellRing deal while also mentioning that the market’s response to the deal is uncertain.

The Finance & Corporate risk factor’s sector average is 39.5%, compared to Post Holdings’ 41.2%. Post Holdings stock has gained about 12% over the past 12 months.

Analysts’ Take

Barclays analyst Andrew Lazar recently reiterated a Buy rating on Post Holdings stock, setting a price target of $127. Lazar’s price target suggests 12.64% upside potential.

Consensus among analysts is a Strong Buy based on 6 Buys. The average Post Holdings price target of $122.33 implies 8.50% upside potential to current levels.

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