Is Post Holdings (POST) Still Attractive After Its Strong Recent Share Price Run

• Wondering if Post Holdings at around US$114.61 is offering fair value or a potential bargain, especially after its recent run, is a natural question for anyone watching the stock.
• The share price performance has been strong recently, with returns of 12.0% over the last 7 days, 15.7% over the last 30 days, 15.0% year to date and 68.0% over 5 years. The 1 year return stands at 1.8% and the 3 year return at 24.9%.
• Recent attention on Post Holdings has centered on its position within the packaged food and beverage space. Investors in this area often focus on steady demand patterns and the role of branded products in consumer staples portfolios. This context has kept interest alive among investors comparing it with other US food, beverage and tobacco names.
• Our valuation checks give Post Holdings a score of 4 out of 6. Next, we will walk through what that means using common valuation methods, before finishing with a broader way to think about the stock's value beyond any single model.

Post Holdings delivered 1.8% returns over the last year. See how this stacks up to the rest of the Food industry.

Approach 1: Post Holdings Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes expected future cash flows, then discounts them back to today to estimate what the entire business could be worth in present value terms.

For Post Holdings, the latest twelve month Free Cash Flow (FCF) is about $462.36 million. Analyst inputs and subsequent projections used in this 2 Stage Free Cash Flow to Equity model suggest FCF rising to $1,160.00 million by 2028. Further FCF projections out to 2035 are generated by Simply Wall St based on those analyst estimates.

When these projected cash flows are discounted back using the DCF approach, the estimated intrinsic value for the equity comes out at about $740.85 per share. Compared with the recent share price of roughly $114.61, this model implies the stock is 84.5% undervalued.

This is one model, built on specific assumptions about future cash flows and discount rates, so it is best viewed as a guide rather than a precise outcome.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Post Holdings is undervalued by 84.5%. Track this in your watchlist or portfolio, or discover 52 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Post Holdings.

Approach 2: Post Holdings Price vs Earnings

For a profitable company like Post Holdings, the P/E ratio is a useful shorthand because it ties the share price directly to the earnings that support it. You are essentially asking how many dollars you are paying for each dollar of earnings.

What counts as a "normal" P/E depends on what investors expect for future growth and how much risk they see in those earnings. Higher expected growth or lower perceived risk can justify a higher multiple, while lower growth or higher risk tends to pull it down.

Post Holdings currently trades on a P/E of 17.22x. That sits below the Food industry average of about 23.08x and above the peer group average of 14.48x. Simply Wall St also provides a proprietary "Fair Ratio" of 19.34x for Post Holdings, which is the P/E level they would expect given factors such as earnings growth, profit margins, industry, market cap and risk profile.

This Fair Ratio aims to be more tailored than a simple peer or industry comparison because it adjusts for the company’s specific characteristics rather than treating all food companies as the same. Set against the current 17.22x P/E, the 19.34x Fair Ratio suggests Post Holdings is trading at a discount to that model based assessment.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Post Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. This simply means attaching your own clear story about a company to the numbers you see, such as your assumed fair value and expectations for Post Holdings’ future revenue, earnings and margins.

A Narrative links three things: what you think is happening with the business, how that view flows into a financial forecast, and the fair value you arrive at from that forecast.

On Simply Wall St, Narratives are an easy feature on the Community page, used by millions of investors, where you can see how different investors connect their views on Post Holdings to explicit assumptions and a fair value estimate.

That fair value can then be compared with the current share price to help you decide whether you think the stock is trading above or below what it is worth. This can support your own decisions about when to buy or sell.

Narratives are also kept fresh because when new information appears, such as news or earnings updates, the underlying forecasts and fair values can be revised.

For Post Holdings, one investor might build a Narrative that points to a much higher fair value than today’s price, while another might set a far lower fair value based on more cautious assumptions about its future.

Do you think there's more to the story for Post Holdings? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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