Post Holdings (POST:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Post Holdings(POST:NYS)

Consumer Defensive:Packaged Foods

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Close Price/Date
$92.61 (USD) 26/11/2018

Weighted Valuation
$112.18 (USD)

Overall Rating
Undervalued by 21.1%

Valuation Models Analyst Consensus: $120.00 (USD)
(in order of importance) Comparables: $119.61 (USD)
Adjusted Book Value: $73.87 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (POST:NYS USD)

Price 92.61
Range 92.08 – 93.44
52 week 71.63 – 100.65
Open 92.54
Vol / Avg. 633738/850165
Mkt cap 6.17B
P/E 15.03
Div/yield 0.00/0.00
EPS 6.16
Shares 66.57M
Beta 0.02

Company Description

Post makes and sells cereals; egg products; refrigerated side dish, potato, and dairy items; and protein shakes, bars, and powders. Brands include Honey Bunches of Oats, Shredded Wheat, Raisin Bran, Simply Potatoes, PowerBar, and Bob Evans. Over 90% of sales are from the United States. Post has been an active acquirer since its 2012 spin-off, buying Michael Foods, MOM Brands, PowerBar, Weetabix, and Bob Evans, among others. Post is the third- largest ready-to-eat cereal firm in the U.S., with 19% share in 2017 per Nielsen.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for POST:NYS

Using a discounted cash flow model we generated an intrinsic value of $503.44 (USD) for POST:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

POST:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $503.44 1% 5% 1% 5%
WACC (or Ke) 8.27 $635.41 $413.46
Terminal Growth Rate 3.00 $421.34 $624.01
Tax Rate -0.77 $520.01 $486.86
Cash Flow 1,344,015,156 $472.38 $534.49
Capital Expenditures -145,400,000 $500.91 $505.96
Long Term Debt 4,508,900,000 $506.82 $500.05

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $119.61 (USD) for POST:NYS. We also generated a valuation of $159.77 (USD) using other metrics and comparables.
The comparable companies were Conagra Brands (CAG:NYS), Campbell Soup (CPB:NYS), Flowers Foods (FLO:NYS), Lancaster Colony (LANC:NAS) and Treehouse Foods (THS:NYS).

Company POST:NYS End Date Value
Earnings/Share $6.16 (USD)
Book Value/Share $46.00 (USD)
Sales/Share $81.91 (USD)
Cash Flow/Share $10.29 (USD)
EBITDA/Share $13.84 (USD)
Price Based on Comps Adjustment Factor (%)
$191.89 (USD) 0.0
$224.49 (USD) -75.8
$137.45 (USD) -7.6
$58.43 (USD) -72.1
$277.28 (USD) 0.0
13.79 PE Ratio 31.15 17.45 43.50 28.82 34.83 0.00
1.92 PB Ratio 4.88 4.63 8.25 3.14 7.22 1.17
1.08 PS Ratio 1.68 1.79 1.30 1.03 3.85 0.42
8.59 PCF Ratio 14.96 15.64 8.66 14.93 29.28 6.31
12.16 EV to EBITDA 20.04 16.43 24.12 16.95 22.64 0.00


Using a multiples approach we generated a valuation of  $208.69 (USD) for POST:NYS

Company POST:NYS End Date Value
Earnings/Share $6.16 (USD)
Book Value/Share $46.00 (USD)
Sales/Share $81.91 (USD)
Cash Flow/Share $10.29 (USD)
EBITDA/Share $13.84 (USD)
Price Based on Comps Adjustment Factor
$511.29 (USD) 0
$75.16 (USD) 0
$81.63 (USD) 0
$100.43 (USD) 0
$274.94 (USD) 0
Ratios Ratio Average
PE Ratio 83.00
PB Ratio 1.63
PS Ratio 1.00
PCF Ratio 9.76
EV to EBITDA 19.87

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  POST:NYS for the last 6 years was  1.62

We ran the Adjusted Book Value for  POST:NYS and generated a book value of  $45.73 (USD)
By multiplying these we get an adjusted valuation of  $73.87 (USD)

Analyst Data

In the Stockcalc database there are 1 analysts that provide a valuation for POST:NYS. The 1 analysts have a concensus valuation for POST:NYS for 2019 of $120.00 (USD).

POST:NYS Post Holdings

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 1 0 4.0000 Outperform 2018-11-23

Current Price: 92.61 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 5.38 6.62
# EPS Analysts 2 1
Mean Revenue 5,801.90 6,155.80
# Revenue Analysts 2 1
Mean Target Price 120.00
Mean Cash Flow 10.26
Mean EBITDA 1,208.00
Mean Net Income 392.40 466.30
Mean Debt Outstanding
Mean Tax Rate 25.00 25.00
Mean Growth Rate 19.35
Mean Capital Expenditure 268.00

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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