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Flowers Foods (FLO) Up 4.2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Flowers Foods (FLO - Free Report) . Shares have added about 4.2% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Flowers Foods Q4 Earnings Surpass Estimates, Sales Up
Flowers Foods reported robust fourth-quarter fiscal 2020 results, with the top and the bottom line surpassing the Zacks Consensus Estimate as well as increasing year over year. Notably, the company benefited from positive mix shift to branded retail products thanks to the pandemic while foodservice business remained soft.
Adjusted earnings per share (EPS) of 28 cents came ahead of the Zacks Consensus Estimate of 24 cents. Further, the bottom line increased from 18 cents reported in the year-ago quarter. Also, additional week contributed 2 cents to the metric.
Sales increased 11.5% to $1,023 million, which beat the Zacks Consensus Estimate of $998.1 million. While pricing/mix increased 7.7%, volumes dropped 4.4%. Also, sales include the impact of additional week to the tune of 8.2%. Notably, higher branded retail sales offset the decline in store-branded retail sales as well as non-retail and other sales.
Materials, labor, supplies and other production expenses (exclusive of depreciation and amortization), as a percentage of sales, contracted 200 basis points (bps) year over year to 51%. This can be attributed to favorable shifts in mix from non-retail and store-branded retail products to branded retail products.
Adjusted selling, distribution and administrative expenses (as a percentage of sales) expanded 10 bps to 37.9%, courtesy of increased distribution fees, escalated employee-incentive costs and higher marketing expenses. These were partly offset by reduced logistics expenses among others. Adjusted EBITDA rose 34.3% to $113.5 million, whereas adjusted EBITDA margin expanded 190 bps to 11.1%.
Category Performance
Branded retail sales rose 22.6% to $675.6 million driven by positive mix shift to branded retail products thanks to the pandemic, new product launches, greater promotional efficiency as well as reduced product returns.
Store-branded retail sales fell 2.6% to $137 million mainly due to decline in volumes as consumer purchasing shifted to branded retail products. Also, lost business stemming from price increases implemented to increase profitability was a reason.
Non-retail and other sales declined 6.8% to $210.5 million mainly due to adverse impacts on foodservice customers amid COVID-19.
More Financial Aspects
The company ended the quarter with cash and cash equivalents of $307.5 million and long-term debt of $960.1 million. Further, stockholders’ equity amounted to $1,373 million. For fiscal 2020, the company’s cash flow from operating activities amounted to $454.5 million, while it incurred capital expenditures of $97.9 million. Capital expenditures are projected in the range of $140-$150 million for fiscal 2021. Flowers Foods paid out dividends worth $167.3 million in the aforementioned period and has 6.2 million shares remaining under the ongoing repurchase program.
Fiscal 2021 Guidance
Management projects sales in the range of $4.21-$4.30 billion for fiscal 2021, suggesting decline of about 4-2% year over year. This includes a 1.8% sales reduction owing to one less week in fiscal 2021. Further, EPS are envisioned in the range of $1.07-$1.17 that includes an effect of nearly 2 cents from one fewer week in fiscal 2021. The company expects net interest expenses of about $12 million and an effective tax rate of nearly 24-24.5% for the fiscal year.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Flowers Foods has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. It's no surprise Flowers Foods has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Flowers Foods (FLO) Up 4.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Flowers Foods (FLO - Free Report) . Shares have added about 4.2% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Flowers Foods Q4 Earnings Surpass Estimates, Sales Up
Flowers Foods reported robust fourth-quarter fiscal 2020 results, with the top and the bottom line surpassing the Zacks Consensus Estimate as well as increasing year over year. Notably, the company benefited from positive mix shift to branded retail products thanks to the pandemic while foodservice business remained soft.
Adjusted earnings per share (EPS) of 28 cents came ahead of the Zacks Consensus Estimate of 24 cents. Further, the bottom line increased from 18 cents reported in the year-ago quarter. Also, additional week contributed 2 cents to the metric.
Sales increased 11.5% to $1,023 million, which beat the Zacks Consensus Estimate of $998.1 million. While pricing/mix increased 7.7%, volumes dropped 4.4%. Also, sales include the impact of additional week to the tune of 8.2%. Notably, higher branded retail sales offset the decline in store-branded retail sales as well as non-retail and other sales.
Materials, labor, supplies and other production expenses (exclusive of depreciation and amortization), as a percentage of sales, contracted 200 basis points (bps) year over year to 51%. This can be attributed to favorable shifts in mix from non-retail and store-branded retail products to branded retail products.
Adjusted selling, distribution and administrative expenses (as a percentage of sales) expanded 10 bps to 37.9%, courtesy of increased distribution fees, escalated employee-incentive costs and higher marketing expenses. These were partly offset by reduced logistics expenses among others. Adjusted EBITDA rose 34.3% to $113.5 million, whereas adjusted EBITDA margin expanded 190 bps to 11.1%.
Category Performance
Branded retail sales rose 22.6% to $675.6 million driven by positive mix shift to branded retail products thanks to the pandemic, new product launches, greater promotional efficiency as well as reduced product returns.
Store-branded retail sales fell 2.6% to $137 million mainly due to decline in volumes as consumer purchasing shifted to branded retail products. Also, lost business stemming from price increases implemented to increase profitability was a reason.
Non-retail and other sales declined 6.8% to $210.5 million mainly due to adverse impacts on foodservice customers amid COVID-19.
More Financial Aspects
The company ended the quarter with cash and cash equivalents of $307.5 million and long-term debt of $960.1 million. Further, stockholders’ equity amounted to $1,373 million. For fiscal 2020, the company’s cash flow from operating activities amounted to $454.5 million, while it incurred capital expenditures of $97.9 million. Capital expenditures are projected in the range of $140-$150 million for fiscal 2021. Flowers Foods paid out dividends worth $167.3 million in the aforementioned period and has 6.2 million shares remaining under the ongoing repurchase program.
Fiscal 2021 Guidance
Management projects sales in the range of $4.21-$4.30 billion for fiscal 2021, suggesting decline of about 4-2% year over year. This includes a 1.8% sales reduction owing to one less week in fiscal 2021. Further, EPS are envisioned in the range of $1.07-$1.17 that includes an effect of nearly 2 cents from one fewer week in fiscal 2021. The company expects net interest expenses of about $12 million and an effective tax rate of nearly 24-24.5% for the fiscal year.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Flowers Foods has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. It's no surprise Flowers Foods has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.