What: Shares of food supplier Post Holdings Inc (NYSE:POST) jumped as much as 16% in early trading Friday after reporting fiscal first-quarter earnings. The stock settled to an 11% gain at 11:30 a.m. ET.
So what: Quarterly sales rose 16.3% to $1.25 billion, driven by the acquisition of MOM Brands, although that did fall slightly below Wall Street's $1.3 billion estimate. Post did swing from a quarterly loss of $101.6 million a year ago to a $10.5 million profit. On an adjusted basis, which pulls out one-time items, earnings were $0.52 per share, easily beating the $0.25 analysts expected.
The big surprise was management increasing its fiscal 2016 EBITDA guidance from $780 million to $820 million to a range of $810 million to $840 million.
Now what: Acquisitions are helping drive sales higher but organically, sales are still in decline. That's something investors have seen consistently in the food space lately as new competitors enter the business.
What's offsetting the disappointing top-line numbers is rapidly expanding margins. That's something management thinks it can keep up throughout the year with the increased guidance. Rising margins are good news, but long-term, the company needs to figure out how to grow sales -- or the pop we see in shares today will be short-lived.
Travis Hoium has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Post Holdings. 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.