On Monday, Evercore ISI updated its financial outlook for Post Holdings (NYSE:POST), a consumer packaged goods holding company. The firm raised the share price target for Post Holdings to $122.00 from the previous $118.00 while reiterating an Outperform rating on the stock.
The adjustment reflects a 3% increase in the price target, which is now equivalent to 10 times the estimated calendar year 2025 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA).
This revision is based on higher EBITDA estimates for Post Holdings. The company has shown strong performance across various segments, particularly noting improvements in supply chain execution and commodity costs.
Post Holdings has also seen benefits from a cautious consumer base, which has positively impacted its value-oriented cereal and pet segment brands, as well as its private label products. The analyst expressed increased confidence in the sustainability of the company's foodservice profitability, which is expected to maintain a run rate of over $95 million per quarter.
The report further highlighted Post Holdings' strategic financial priorities, which continue to focus on share repurchase and acquisitions. For the fiscal year 2024, the company's free cash flow (FCF) is projected to be approximately $515 million, representing an 8% FCF yield. This projection underscores the firm's positive outlook on Post Holdings' financial health and growth prospects.
InvestingPro Insights
Evercore ISI's recent price target increase for Post Holdings is complemented by several key metrics and insights from InvestingPro. The company's market capitalization stands at a robust $6.22 billion, and it boasts a forward P/E ratio of 16.73, indicating a potentially more attractive valuation compared to the current P/E of 19.71. This aligns with the InvestingPro Tip that Post Holdings' valuation implies a strong free cash flow yield, supporting the analyst's positive stance on the company's financial health.
With a revenue growth of 23.52% over the last twelve months as of Q2 2024, Post Holdings demonstrates a strong upward trajectory in its earnings, which is further substantiated by a substantial gross profit margin of 28.38%. The company's strategic financial priorities, including aggressive share buybacks as highlighted by another InvestingPro Tip, suggest a proactive approach to enhancing shareholder value. Notably, Post Holdings does not pay a dividend, which could indicate a focus on reinvesting earnings back into the company's growth initiatives.
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