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KeyBanc Capital Markets Upgrades Flowers Foods to ‘Overweight’

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Price movement

Flowers Foods (FLO) has a market cap of $3.6 billion. It rose 3.5% to close at $19.67 per share on December 15, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 15.5%, 23.8%, and -4.9%, respectively, on the same day.

FLO is trading 19.2% above its 20-day moving average, 25.2% above its 50-day moving average, and 16.7% above its 200-day moving average.

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Related ETF and peers

The Vanguard S&P Mid-Cap 400 Growth ETF (IVOG) invests 0.49% of its holdings in Flowers Foods. The YTD price movement of IVOG was 15.0% on December 15.

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

  • Campbell Soup (CPB) — $18.0 billion
  • Panera Bread (PNRA) — $5.0 billion

FLO’s rating

On December 15, 2016, KeyBanc Capital Markets has upgraded Flowers Foods’s rating to “overweight” from “sector weight” and also set the stock’s price target at $23.00 per share.

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Performance of Flowers Foods in fiscal 3Q16

Flowers Foods (FLO) reported fiscal 3Q16 sales of $918.8 million, a YoY (year-over-year) rise of 3.8% over $885.3 million in fiscal 3Q15. These higher sales were a result of acquisitions, a rise in the price-to-mix ratio, and a fall in volume.

Sales from direct store delivery and warehouse delivery rose 3.0% and 7.8%, respectively, between fiscal 3Q15 and fiscal 3Q16. The company also reported a pension plan settlement loss of $1.8 million in fiscal 3Q16. Its income from operations fell 70 basis points.

Flowers Foods’s net income and EPS (earnings per share) fell to $40.2 million and $0.19, respectively, in fiscal 3Q16 compared to $43.8 million and $0.21 in fiscal 3Q15. It reported adjusted EBITDA[1. earnings before interest, tax, depreciation, and amortization] and adjusted EPS of $101.7 million and $0.21, respectively, in fiscal 3Q16. That’s a YoY fall of 3.0% and 8.7%, respectively, from fiscal 3Q15.

Projections

Flowers Foods (FLO) made the following projections for fiscal 2016:

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

Next, we’ll take a look at Pinnacle Foods (PF).

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