Update: Post Holdings Earnings

| About: Post Holdings, (POST)


The company missed earnings and shares crumbled.

We stand by our long-term buy thesis for the company.

Anticipated the aggressive acquisition strategy and felt acquisition costs clouded the quarterly results.

Shares of Post Holdings (NYSE:POST) tumbled nearly 18% today on a poor earnings report. The quarter was abysmal on the surface. Earnings for fiscal 3Q came in at a $0.30 loss, versus expectations of a positive $0.27. Revenue marginally beat expectations. Driving the selloff is a downward revision for full year 2014 EBITDA guidance. But the food division also saw sales down 3.4% y/y as cereal demand weakens.

However, that's where the acquisition strategy is a positive and should help diversify its revenue stream. 3Q revenues were $633 million, compared to $375 million in the same quarter last year. EBITDA was $87.8 million in 3Q (including $37.8 million from acquisitions) compared to $31.8 million in the same quarter last year.

We covered Post in July of last year and since then shares are down nearly 25%. At the time, we stated that having the current CEO, Bill Stiritz, was a long-term positive, noting,

...CEO Bill Stiritz has a history of setting up companies to be acquired. He did this when he was Chairman & CEO of Ralston Purina before it was acquired by Nestle in 2001.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.