Post Holdings: Undervalued and Strong Buy

Post Holdings (POST) is a strong value stock with a Zacks Rank of #1 (Strong Buy) and a Value grade of A. Its P/E ratio of 13.9 is lower than its industry average of 15.90, and its P/B ratio of 1.55 is also lower than its industry average of 1.93. Additionally, its P/S ratio of 0.78 is lower than its industry average of 0.97. These valuation metrics suggest that POST is undervalued at the moment, making it an attractive value stock for investors.

Post Holdings (POST) has emerged as a standout performer in the consumer packaged goods (CPG) sector, leveraging strategic portfolio optimization and disciplined capital allocation to enhance shareholder value. The company's dual strategy of trimming underperforming assets and aggressive share repurchases has paid off, with a significant boost in earnings per share (EPS) and a strong stock performance.

In 2025, Post Holdings executed a dual strategy: trimming underperforming assets and aggressive share repurchases to boost shareholder value. The company's $500 million buyback program reduced shares by 4.31%, driving a 3.49% stock surge and $1.98 billion Q3 sales amid CPG sector stagnation [1]. This aggressive reduction in share count is a textbook move to boost EPS and signal confidence in the business’s long-term trajectory. The market responded favorably, with the stock climbing 3.49% following the Q3 earnings report [1].

But Post’s playbook goes beyond buybacks. The company has strategically reallocated capital to high-growth areas, such as its Foodservice and Refrigerated Retail segments. Acquisitions like 8th Avenue Food & Provisions and Potato Products of Idaho (PPI) have fortified these divisions, which now contribute to a more diversified revenue stream [3]. This rebalancing is paying off: Q3 2025 net sales hit $1.98 billion, with Adjusted EBITDA guidance raised to $1.5 billion–$1.52 billion for the fiscal year [2]. Analysts have upgraded their outlook, with a 12-month price target of $131.20 (a 17.9% upside) and a “Buy” consensus [1].

The company’s capital discipline is further underscored by its decision to divest non-core assets, such as its pasta business, to focus on higher-margin opportunities [2]. This “trim and invest” approach mirrors best practices in CPG, where companies must balance cost-cutting with innovation to stay competitive. Post’s Q3 results—$400 million in Adjusted EBITDA and $2.0 billion in revenue—validate this strategy [1].

For investors, the message is clear: Post Holdings is not just surviving in a tough CPG landscape but thriving by prioritizing shareholder returns and operational agility. The combination of buybacks, strategic acquisitions, and portfolio optimization creates a flywheel effect—boosting EPS, enhancing cash flow, and driving long-term value. With a revised EBITDA outlook and a 17.9% upside from analyst targets, the stock offers a compelling case for those seeking undervalued CPG plays.

References:
[1] Post Holdings' Strategic Divestiture and Share Buyback [https://www.ainvest.com/news/post-holdings-strategic-divestiture-share-buyback-signal-shareholder-focused-capital-allocation-2508/]
[2] Post Holdings Announces Sale of Pasta Business [https://www.stocktitan.net/news/POST/post-holdings-announces-sale-of-pasta-business-new-share-repurchase-5p5lcymjmoic.html]
[3] Post Holdings' Q3 Earnings and Strategic Rebalancing [https://www.ainvest.com/news/post-holdings-q3-earnings-strategic-rebalancing-deep-dive-segment-performance-future-growth-catalysts-2508/]