Ralcorp Holdings Earnings Preview

While Ralcorp Holdings (NYSE: RAH  ) missed estimates last quarter, investors hope that it will bounce back and outpace Wall Street expectations this quarter. The company will unveil its latest earnings on Tuesday, Feb. 7. Ralcorp Holdings is engaged in manufacturing, distributing, and marketing Post-branded cereals and store-brand food products in the grocery, mass merchandise, drug, and food service channels.

What analysts say:

• Buy, sell, or hold?: Half of analysts think investors should stand pat on Ralcorp Holdings while the remaining half rate the stock as a buy. Analysts like Ralcorp Holdings better than competitor J.M. Smucker overall. Four out of 13 analysts rate J.M. Smucker a buy compared to six out of 12 for Ralcorp Holdings. While analysts still rate the stock a moderate buy, they are a little more optimistic about it compared to three months ago.
• Revenue forecasts: On average, analysts predict $1.32 billion in revenue this quarter. That would represent a rise of 12.8% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is earnings of $1.39 per share. Estimates range from $1.24 to $1.48.

What our community says:
CAPS All-Stars are strongly supporting the stock, with 96.2% assigning it an outperform rating. The community at large is in line with the All-Stars, with 92.1% awarding it a rating of outperform. Fools are keen on Ralcorp Holdings, though the message boards have been quiet lately with only 68 posts in the past 30 days. Despite the majority sentiment in favor of Ralcorp Holdings, the stock has a middling CAPS rating of three out of five stars.

Management:
Revenue has now gone up for three straight quarters.

Now, a look at how efficient management has been at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The company's net margins have slipped in the last two quarters year over year. Net margins reflect what percentage of revenue becomes profit. Here is how Ralcorp Holdings has been doing for the last four quarters:

Quarter	Q4	Q3	Q2	Q1
Gross Margin	24.1%	24.7%	29%	27.1%
Operating Margin	(29.2%)	6.5%	14%	12.5%
Net Margin	(30.3%)	2.4%	7.1%	6.1%

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Earnings estimates provided by Zacks.