How The Wheels Came Off Ralcorp Holdings' Bus

Seth Jayson, The Motley Fool
Updated

Ralcorp Holdings (NYS: RAH) reported earnings on May 22. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q2), Ralcorp Holdings beat slightly on revenues and whiffed on earnings per share.

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


Margins contracted across the board.

Revenue details
Ralcorp Holdings reported revenue of $1.06 billion. The 10 analysts polled by S&P Capital IQ anticipated sales of $1.05 billion on the same basis. GAAP reported sales were 9.4% lower 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
EPS came in at $0.72. The 11 earnings estimates compiled by S&P Capital IQ predicted $0.84 per share. GAAP EPS of $0.47 for Q2 were 69% lower than the prior-year quarter's $1.50 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 21.0%, 800 basis points worse than the prior-year quarter. Operating margin was 7.2%, 680 basis points worse than the prior-year quarter. Net margin was 2.5%, 460 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $1.03 billion. On the bottom line, the average EPS estimate is $0.75.

Next year's average estimate for revenue is $4.46 billion. The average EPS estimate is $3.49.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 129 members out of 140 rating the stock outperform, and 11 members rating it underperform. Among 47 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 46 give Ralcorp Holdings a green thumbs-up, and one give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Ralcorp Holdings is outperform, with an average price target of $78.75.

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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