Ralcorp Holdings Increases Sales but Misses Estimates on Earnings

Seth Jayson, The Motley Fool
Updated

Ralcorp Holdings (NYS: RAH) reported earnings on Feb. 8. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q1), Ralcorp Holdings beat expectations on revenues and missed expectations on earnings per share.

Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share shrank.

Margins dropped across the board.

Revenue details
Ralcorp Holdings tallied revenue of $1.38 billion. The 10 analysts polled by S&P Capital IQ expected revenue of $1.30 billion. GAAP sales were 18% higher than the prior-year quarter's $1.17 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $1.33. The 10 earnings estimates compiled by S&P Capital IQ forecast $1.34 per share on the same basis. GAAP EPS of $1.16 for Q1 were 9.4% lower than the prior-year quarter's $1.28 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 24.4%, 270 basis points worse than the prior-year quarter. Operating margin was 9.8%, 300 basis points worse than the prior-year quarter. Net margin was 4.7%, 140 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $1.09 billion. On the bottom line, the average EPS estimate is $0.99.

Next year's average estimate for revenue is $4.63 billion. The average EPS estimate is $4.11.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 130 members out of 140 rating the stock outperform, and 10 members rating it underperform. Among 49 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 49 give Ralcorp Holdings a green thumbs-up.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Ralcorp Holdings is outperform, with an average price target of $85.70.

At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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