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Factors Setting the Tone for Flowers Foods' (FLO) Q1 Earnings
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Flowers Foods, Inc. (FLO - Free Report) is likely to witness year-over-year declines in the top and bottom lines when it reports first-quarter fiscal 2021 numbers on May 20. The Zacks Consensus Estimate for earnings has fallen 5.1% over the past 30 days to 37 cents per share, which indicates a 9.8% decline from the figure reported in the prior-year period. However, this producer and marketer of packaged bakery products has a trailing four-quarter earnings surprise of 14.9%, on average. Also, Flowers Foods delivered an earnings surprise of 16.7% in the last reported quarter.
The Zacks Consensus Estimate for revenues is pegged at $1,307 million, suggesting a decline of 3.2% from the prior-year quarter’s reported figure. The company had witnessed a revenue increase of 11.5% in the last reported quarter.
Flowers Foods, Inc. Price, Consensus and EPS Surprise
Flowers Foods’ foodservice performance has been under pressure due to social-distancing trends. Incidentally, non-retail and other sales declined 6.8% to $210.5 million in the fourth quarter of fiscal 2020 mainly due to adverse impacts on foodservice customers amid COVID-19. The company’s non-retail and other category includes foodservice, institutional, vending, thrift stores, restaurant and contract manufacturing. Apart from these, store-branded retail sales fell 2.6% to $137 million mainly due to a decline in volumes as consumer purchasing shifted to branded retail products. We note that Flowers Foods has shifted focus from foodservice to branded retail products, given the current situation.
Also, Flowers Foods has been seeing higher costs for a while now. During fourth-quarter fiscal 2020, adjusted selling, distribution and administrative expenses (as a percentage of sales) rose 10 basis points due to increased distribution fees, escalated employee-incentive costs and higher marketing expenses. Apart from these, the company on its last earnings call said that it expects its digital strategy to entail considerable capital investment and expenses over the next several years. Further, the company’s guidance for fiscal 2021 reflects year-over-year declines in sales and earnings per share. These factors raise concerns over the quarter under review.
On the brighter side, the company’s branded retail sales have been gaining on burgeoning demand stemming from higher at-home consumption amid the pandemic-led stay-at-home trends. Additionally, the company has been focused on core priorities, which include developing its team, concentrating on brands, prioritizing margins and looking out for prudent mergers and acquisitions. In fact, Flowers Foods’ shift toward value-added branded retail products also goes in tandem with these priorities.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Flowers Foods this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season.
e.l.f. Beauty (ELF - Free Report) has an Earnings ESP of +17.86% and a Zacks Rank #3.
Dollar Tree (DLTR - Free Report) has an Earnings ESP of +1.40% and a Zacks Rank #3.
Burlington Stores (BURL - Free Report) has an Earnings ESP of +36.98% and a Zacks Rank #3.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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Factors Setting the Tone for Flowers Foods' (FLO) Q1 Earnings
Flowers Foods, Inc. (FLO - Free Report) is likely to witness year-over-year declines in the top and bottom lines when it reports first-quarter fiscal 2021 numbers on May 20. The Zacks Consensus Estimate for earnings has fallen 5.1% over the past 30 days to 37 cents per share, which indicates a 9.8% decline from the figure reported in the prior-year period. However, this producer and marketer of packaged bakery products has a trailing four-quarter earnings surprise of 14.9%, on average. Also, Flowers Foods delivered an earnings surprise of 16.7% in the last reported quarter.
The Zacks Consensus Estimate for revenues is pegged at $1,307 million, suggesting a decline of 3.2% from the prior-year quarter’s reported figure. The company had witnessed a revenue increase of 11.5% in the last reported quarter.
Flowers Foods, Inc. Price, Consensus and EPS Surprise
Flowers Foods, Inc. price-consensus-eps-surprise-chart | Flowers Foods, Inc. Quote
Key Factors to Note
Flowers Foods’ foodservice performance has been under pressure due to social-distancing trends. Incidentally, non-retail and other sales declined 6.8% to $210.5 million in the fourth quarter of fiscal 2020 mainly due to adverse impacts on foodservice customers amid COVID-19. The company’s non-retail and other category includes foodservice, institutional, vending, thrift stores, restaurant and contract manufacturing. Apart from these, store-branded retail sales fell 2.6% to $137 million mainly due to a decline in volumes as consumer purchasing shifted to branded retail products. We note that Flowers Foods has shifted focus from foodservice to branded retail products, given the current situation.
Also, Flowers Foods has been seeing higher costs for a while now. During fourth-quarter fiscal 2020, adjusted selling, distribution and administrative expenses (as a percentage of sales) rose 10 basis points due to increased distribution fees, escalated employee-incentive costs and higher marketing expenses. Apart from these, the company on its last earnings call said that it expects its digital strategy to entail considerable capital investment and expenses over the next several years. Further, the company’s guidance for fiscal 2021 reflects year-over-year declines in sales and earnings per share. These factors raise concerns over the quarter under review.
On the brighter side, the company’s branded retail sales have been gaining on burgeoning demand stemming from higher at-home consumption amid the pandemic-led stay-at-home trends. Additionally, the company has been focused on core priorities, which include developing its team, concentrating on brands, prioritizing margins and looking out for prudent mergers and acquisitions. In fact, Flowers Foods’ shift toward value-added branded retail products also goes in tandem with these priorities.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Flowers Foods this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Flowers Foods currently has a Zacks Rank #3 and an Earnings ESP of +5.41%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks With Favorable Combinations
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season.
e.l.f. Beauty (ELF - Free Report) has an Earnings ESP of +17.86% and a Zacks Rank #3.
Dollar Tree (DLTR - Free Report) has an Earnings ESP of +1.40% and a Zacks Rank #3.
Burlington Stores (BURL - Free Report) has an Earnings ESP of +36.98% and a Zacks Rank #3.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>