Over the past six months, Post’s shares (currently trading at $103.75) have posted a disappointing 6.9% loss, well below the S&P 500’s 15.6% gain. This may have investors wondering how to approach the situation.
Is now the time to buy Post, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Is Post Not Exciting?
Despite the more favorable entry price, we're swiping left on Post for now. Here are three reasons there are better opportunities than POST and a stock we'd rather own.
1. Demand Slipping as Sales Volumes Decline
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
Post’s average quarterly sales volumes have shrunk by 3.7% over the last two years. This decrease isn’t ideal because the quantity demanded for consumer staples products is typically stable. 
2. Free Cash Flow Margin Dropping
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Post’s margin dropped by 1.9 percentage points over the last year. If its declines continue, it could signal increasing investment needs and capital intensity. Post’s free cash flow margin for the trailing 12 months was 5.5%.
3. Previous Growth Initiatives Haven’t Impressed
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).
Post historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 5.8%, somewhat low compared to the best consumer staples companies that consistently pump out 20%+.
Final Judgment
Post isn’t a terrible business, but it isn’t one of our picks. Following the recent decline, the stock trades at 13.3× forward P/E (or $103.75 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're fairly confident there are better stocks to buy right now. We’d suggest looking at a fast-growing restaurant franchise with an A+ ranch dressing sauce.
Stocks We Like More Than Post
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