Investment Thesis
Investors in Post Holdings (POST) are betting on revenue growth and overlooking profit margins. This is not necessarily a bad strategy but one must not undermine the firm's risk profile. Peer comparison indicates that POST ranks high in terms of revenue growth and gross margin but falls short on profit margin. When plotted against the stock prices of peers, the momentum effect is clear in POST, but a highly leveraged position and competitive landscape combined with bottom line pressure put the firm on a moderate to high-risk profile. Combining all the