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Analyzing Flowers Foods’ Valuation and Dividend Yield

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Feb. 14 2018, Updated 7:31 a.m. ET

Forward PE

As of February 9, 2018, Flowers Foods (FLO) was trading at a 12-month forward PE (price to earnings) multiple of 19.5x. Forward PE multiple reflects the investment investors need to make in a company to get a return of one dollar of that company’s forward EPS (earnings per share).

Following fiscal 4Q17 results, the valuation multiple for Flowers Foods has decreased 1.4%. As discussed previously in this series, the company reported fiscal 4Q17 results on February 7, 2018.

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Peer comparison

The company is trading at a higher valuation multiple in comparison with some of its peers. Campbell Soup (CPB) is trading at a 12-month forward PE ratio of 15.0x, while Post Holdings (POST) is trading at a 12-month forward PE ratio of 15.1x. However, J&J Snack Foods (JJSF) is trading at a 12-month forward PE of ~25.8x as of February 9, 2018, higher than that of Flowers Foods.

A word on dividend yield

Dividend yield refers to the cash flow an investor gets for each dollar invested in the company’s stock. The company’s current dividend yield of 3.3% based on the closing price of $20.37 as of February 9, 2018, is higher than some of its peers. For instance, Campbell Soup’s current dividend yield stands at 3.1%, while that of J&J Snack Foods is 1.3%. Lancaster Colony’s (LANC) dividend yield stands at 2% as of February 9, 2018.

Flowers Foods also has a share buyback plan in place. Share repurchases give upside to the bottom line. As of December 30, 2017, there were 6.6 million shares left under the authorization plan.

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