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DA Davidson Rates Flowers Foods as ‘Neutral’

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Nov. 20 2020, Updated 5:09 p.m. ET

Price movement

Flowers Foods (FLO) has a market cap of $3.1 billion. It rose 0.74% to close at $14.97 per share on October 5, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -1.6%, 0.60%, and -28.4%, respectively, on the same day.

FLO is trading 1.6% below its 20-day moving average, 4.7% below its 50-day moving average, and 16.3% below its 200-day moving average.

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Related ETFs and peers

The Vanguard S&P Mid-Cap 400 Growth ETF (IVOG) invests 0.49% of its holdings in Flowers Foods. The ETF tracks a market cap–weighted index of growth companies selected from the S&P 400. The YTD price movement of IVOG was 8.5% on October 5.

The SPDR S&P 400 Mid-Cap Growth ETF (MDYG) invests 0.49% of its holdings in Flowers Foods. The ETF tracks a market cap–weighted index of growth companies selected from the S&P 400.

The market caps of Flowers Foods’ competitors are as follows:

  • Campbell Soup Company (CPB) — $16.5 billion
  • Panera Bread Company (PNRA) — $4.5 billion

Flowers Foods’ rating

DA Davidson has initiated its coverage of Flowers Foods with a “neutral” rating, and it’s set the stock’s price target at $16.0 per share.

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Performance of Flowers Foods in 2Q16

Flowers Foods reported 2Q16 sales of $935.0 million, a rise of 5.2% from its sales of $888.8 million in 2Q15. This rise was due to the company’s acquisitions of Dave’s Killer Bread (DKB) and Alpine Valley Bread. 

Sales from FLO’s direct store delivery and warehouse delivery rose 4.5% and 9.1%, respectively, between 2Q15 and 2Q16. It reported a pension plan settlement loss of $4.6 million in 2Q16. Its income from operations rose 1.8% in the same quarter.

FLO’s net income fell to $51.2 million in 2Q16, compared to $51.8 million in 2Q15. It reported EPS (earnings per share) of $0.24 in both 2Q15 and 2Q16. It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) and adjusted EPS of $118.7 million and $0.26, respectively, in 2Q16, rises of 5.2% and 4.0%, respectively, compared to 2Q15.

Projections

Flowers Foods has made the following projections for 2016:

  • sales in the range of $3.9 billion–$4.0 billion
  • EPS in the range of $0.88–$0.93
  • adjusted EPS in the range of $0.90–$0.95

These projections consider increased competitiveness in the market and weak volumes. In the next part of this series, we’ll take a look at Blue Buffalo Pet Products (BUFF).

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