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Why Is Flowers Foods (FLO) Up 4.4% Since Last Earnings Report?
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A month has gone by since the last earnings report for Flowers Foods (FLO - Free Report) . Shares have added about 4.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Flowers Foods due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Flowers Foods posted third-quarter 2019 results, wherein the bottom line was in line with the Zacks Consensus Estimate, while it fell on a year-over-year basis. It continues to face headwinds related to the tight labor market.
Nevertheless, Flowers Foods’ top line improved year over year and surpassed the consensus mark. Further, contributions from the Canyon Bakehouse buyout aided top-line growth.
Earnings & Sales
The company’s adjusted earnings per share (EPS) of 22 cents were in line with the Zacks Consensus Estimate. The bottom line declined 4.3% year over year.
Net sales advanced 4.7% to $966.6 million, which beat the Zacks Consensus Estimate of $943 million. Excluding the Canyon Bakehouse buyout, net sales grew 2.5%. Sales were backed by increased branded retail and store-branded retail sales, somewhat offset by lower non-retail and other sales.
Costs & Margins
Materials, labor, supplies and other production expenses (net of depreciation and amortization) as a percentage of sales escalated 10 basis points (bps) to 52.7%. This resulted from reduced manufacturing efficiencies and increased workforce-related costs. Better pricing/mix and reduced ingredient expenses offered some respite.
Selling, distribution and administrative expenses declined 70 bps to 37.5% of sales, courtesy of reduced transportation costs and lower distribution fees, which more than offset increase in workforce-related costs and marketing expenses. Meanwhile, the metric rose 60 bps on an adjusted basis.
Adjusted EBITDA declined 2.3% to $95.1 million, whereas adjusted EBITDA margin contracted 70 bps to 9.8%.
Category Performance
Branded retail sales rose 6.7% to $586.1 million, backed by constant gains from DKB organic products, Wonder, Nature's Own Perfectly Crafted and Sun-Maid breakfast bread, contributions from the Canyon Bakehouse buyout, and improved price/mix.
Store branded retail sales rose 8.7% to $150.8 million, owing to contributions from the Canyon Bakehouse buyout, increased distributions and better price/mix. This was somewhat countered by weakness in store-branded cake and breakfast bread.
Non-retail and other sales dropped 2.4% to $229.6 million, thanks to lower institutional products and vending volume along with adverse price/mix in foodservice.
More Financial Aspects
The company ended the quarter with cash and cash equivalents of roughly $7 million, and long-term debt and capital leases (including current portion) of $878 million. Further, stockholders’ equity amounted to $1,293.3 million.
Until the third quarter of 2019, the company’s cash flow from operating activities amounted to $278.1 million while it incurred capital expenditure of $70.6 million. Capital expenditure is envisioned at $110-$120 million for 2019.
Flowers Foods paid out dividends worth $119.8 million in the third quarter and had 6.2 million shares remaining under the ongoing repurchase program.
Guidance
Management remains impressed with its performance, marked by solid sales. The company is pleased with the success of its acquisitions, product innovations and cost-effective endeavors. It launched another initiative, which aims at optimizing its portfolio and enhancing the supply-chain network to lower fixed costs and improve product margins.
All said, the company now expects sales of $4.110-$4.130 billion for 2019, suggesting 4-4.5% growth from the year-ago period’s reported figure. This is likely to include sales of nearly $75-$80 million from Canyon Bakehouse. Earlier, the company projected sales growth of 2-4%.
Adjusted EPS is still projected to be 94-99 cents.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Flowers Foods has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Flowers Foods has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Flowers Foods (FLO) Up 4.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Flowers Foods (FLO - Free Report) . Shares have added about 4.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Flowers Foods due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Flowers Foods Q3 Earnings Meet, Sales Beat Estimates
Flowers Foods posted third-quarter 2019 results, wherein the bottom line was in line with the Zacks Consensus Estimate, while it fell on a year-over-year basis. It continues to face headwinds related to the tight labor market.
Nevertheless, Flowers Foods’ top line improved year over year and surpassed the consensus mark. Further, contributions from the Canyon Bakehouse buyout aided top-line growth.
Earnings & Sales
The company’s adjusted earnings per share (EPS) of 22 cents were in line with the Zacks Consensus Estimate. The bottom line declined 4.3% year over year.
Net sales advanced 4.7% to $966.6 million, which beat the Zacks Consensus Estimate of $943 million. Excluding the Canyon Bakehouse buyout, net sales grew 2.5%. Sales were backed by increased branded retail and store-branded retail sales, somewhat offset by lower non-retail and other sales.
Costs & Margins
Materials, labor, supplies and other production expenses (net of depreciation and amortization) as a percentage of sales escalated 10 basis points (bps) to 52.7%. This resulted from reduced manufacturing efficiencies and increased workforce-related costs. Better pricing/mix and reduced ingredient expenses offered some respite.
Selling, distribution and administrative expenses declined 70 bps to 37.5% of sales, courtesy of reduced transportation costs and lower distribution fees, which more than offset increase in workforce-related costs and marketing expenses. Meanwhile, the metric rose 60 bps on an adjusted basis.
Adjusted EBITDA declined 2.3% to $95.1 million, whereas adjusted EBITDA margin contracted 70 bps to 9.8%.
Category Performance
Branded retail sales rose 6.7% to $586.1 million, backed by constant gains from DKB organic products, Wonder, Nature's Own Perfectly Crafted and Sun-Maid breakfast bread, contributions from the Canyon Bakehouse buyout, and improved price/mix.
Store branded retail sales rose 8.7% to $150.8 million, owing to contributions from the Canyon Bakehouse buyout, increased distributions and better price/mix. This was somewhat countered by weakness in store-branded cake and breakfast bread.
Non-retail and other sales dropped 2.4% to $229.6 million, thanks to lower institutional products and vending volume along with adverse price/mix in foodservice.
More Financial Aspects
The company ended the quarter with cash and cash equivalents of roughly $7 million, and long-term debt and capital leases (including current portion) of $878 million. Further, stockholders’ equity amounted to $1,293.3 million.
Until the third quarter of 2019, the company’s cash flow from operating activities amounted to $278.1 million while it incurred capital expenditure of $70.6 million. Capital expenditure is envisioned at $110-$120 million for 2019.
Flowers Foods paid out dividends worth $119.8 million in the third quarter and had 6.2 million shares remaining under the ongoing repurchase program.
Guidance
Management remains impressed with its performance, marked by solid sales. The company is pleased with the success of its acquisitions, product innovations and cost-effective endeavors. It launched another initiative, which aims at optimizing its portfolio and enhancing the supply-chain network to lower fixed costs and improve product margins.
All said, the company now expects sales of $4.110-$4.130 billion for 2019, suggesting 4-4.5% growth from the year-ago period’s reported figure. This is likely to include sales of nearly $75-$80 million from Canyon Bakehouse. Earlier, the company projected sales growth of 2-4%.
Adjusted EPS is still projected to be 94-99 cents.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Flowers Foods has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Flowers Foods has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.