Analyst Note
| Rebecca Scheuneman, CFA |In no-moat Post’s fiscal fourth quarter, labor constraints and supply chain disruptions resulted in missed sales opportunities and higher operating costs as input shortages, unreliable transportation, and insufficient staff caused production lines to sit idle. Fiscal 2021 organic sales grew 5.2%, topping our 4.2% estimate given higher prices, despite unfilled orders for Premier Protein shakes, as well as egg and potato products. Post’s 2021 gross and adjusted EBITDA margins contracted 220 and 200 basis points, respectively, to 29.1% and 18.0%, missing our call for 30.5% and 19.2%. In late August, Post had significant shortages at six plants, which has improved to three plants currently, and we think this disruption will hinder Post’s performance for much of fiscal 2022. We plan to lower our fiscal 2022 estimates, which call for 5% organic sales growth and adjusted EBITDA of $1.36 billion, above newly issued EBITDA guidance of $1.16 billion-$1.2 billion. This should result in a mid-single-digit drop to our $114 fair value estimate. With shares down a similar rate, the stock looks modestly undervalued.