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Flowers Foods' (FLO) Papa Pita Bakery Buyout to Drive Growth
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Flowers Foods, Inc. (FLO - Free Report) has been focusing on acquisitions to strengthen its product portfolio and expand in untapped markets. Keeping on these lines, the leading producer of packaged bakery foods acquired Papa Pita Bakery. Papa Pita Bakery manufacturers and distributes good quality bagels, breads, tortillas, buns, flatbreads and English muffins. The acquired business will run as an independent subsidiary of FLO.
Certainly, the acquisition of Papa Pita Bakery will generate higher manufacturing and distribution synergies for the company. Flowers Foods’ shares have inched up 1.2% in the past six months against the industry’s 1.2% decline.
What Else Should You Know?
Flowers Foods is committed to undertaking acquisitions for a while now. The company has acquired more than 100 companies since 1968 and believes there’s still plenty of potential with respect to M&A activities. In December 2018, it completed the acquisition of Canyon Bakehouse, which has helped Flowers Foods foray into the growing gluten-free bakery space. Well, Flowers Foods has successfully integrated Canyon Bakehouse, which is yielding positive results. In 2015, FLO bought Dave’s Killer Bread (DKB) and Alpine Valley Bread company. With the acquisition of DKB, the company got access to the Pacific Northwest market. Brands like DKB, Nature's Own and Canyon Bakehouse brands continue to perform well.
Image Source: Zacks Investment Research
Flowers Foods is on track with its core priorities, which include developing its team, concentrating on brands, prioritizing margins and targeting prudent mergers and acquisitions. To this end, management is shifting focus toward becoming a more brand-focused company. The company expects its optimized portfolio to drive market share gains through innovation. The company is focused on undertaking innovation in its leading brands, which is likely to aid growth.
Moving to margins, the company’s brand-building efforts, such as shifting a larger proportion of the sales mix to branded retail, are aiding performance. Management is also undertaking saving measures and efforts to enhance business efficiency.
Wrapping Up
The Zacks Rank #4 (Sell) company is battling major hurdles due to cost inflation and supply-chain bottlenecks. In the fourth quarter of fiscal 2022, its materials, supplies, labor and other production costs (excluding depreciation and amortization) escalated by 110 basis points (bps) to 53.2% on rising input cost inflation. Its quarterly adjusted EBITDA margin was 8.9%, which contracted 10 bps.
Although increased cost inflation remains a concern for the company, it is on track to counter such headwinds by implementing price increases, improving the profitability of lower-margin products and enhancing its branded portfolio through innovation.
Conagra, a consumer-packaged goods food company, currently sports a Zacks Rank #1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Conagra’s current fiscal-year sales and earnings suggests growth of 7.2% and 12.7%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, which is a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggests an increase of 19.3% and 89.9%, respectively, from the year-ago reported number.
Mondelez International, which manufactures, markets, and sells snack food and beverage products, carries a Zacks Rank 2. MDLZ has a trailing four-quarter earnings surprise of 7.5%, on average.
The Zacks Consensus Estimate for Mondelez’s current financial year sales and earnings suggests growth of 9% and 7.5%, respectively, from the corresponding year-ago reported figures.
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Flowers Foods' (FLO) Papa Pita Bakery Buyout to Drive Growth
Flowers Foods, Inc. (FLO - Free Report) has been focusing on acquisitions to strengthen its product portfolio and expand in untapped markets. Keeping on these lines, the leading producer of packaged bakery foods acquired Papa Pita Bakery. Papa Pita Bakery manufacturers and distributes good quality bagels, breads, tortillas, buns, flatbreads and English muffins. The acquired business will run as an independent subsidiary of FLO.
Certainly, the acquisition of Papa Pita Bakery will generate higher manufacturing and distribution synergies for the company. Flowers Foods’ shares have inched up 1.2% in the past six months against the industry’s 1.2% decline.
What Else Should You Know?
Flowers Foods is committed to undertaking acquisitions for a while now. The company has acquired more than 100 companies since 1968 and believes there’s still plenty of potential with respect to M&A activities. In December 2018, it completed the acquisition of Canyon Bakehouse, which has helped Flowers Foods foray into the growing gluten-free bakery space. Well, Flowers Foods has successfully integrated Canyon Bakehouse, which is yielding positive results. In 2015, FLO bought Dave’s Killer Bread (DKB) and Alpine Valley Bread company. With the acquisition of DKB, the company got access to the Pacific Northwest market. Brands like DKB, Nature's Own and Canyon Bakehouse brands continue to perform well.
Image Source: Zacks Investment Research
Flowers Foods is on track with its core priorities, which include developing its team, concentrating on brands, prioritizing margins and targeting prudent mergers and acquisitions. To this end, management is shifting focus toward becoming a more brand-focused company. The company expects its optimized portfolio to drive market share gains through innovation. The company is focused on undertaking innovation in its leading brands, which is likely to aid growth.
Moving to margins, the company’s brand-building efforts, such as shifting a larger proportion of the sales mix to branded retail, are aiding performance. Management is also undertaking saving measures and efforts to enhance business efficiency.
Wrapping Up
The Zacks Rank #4 (Sell) company is battling major hurdles due to cost inflation and supply-chain bottlenecks. In the fourth quarter of fiscal 2022, its materials, supplies, labor and other production costs (excluding depreciation and amortization) escalated by 110 basis points (bps) to 53.2% on rising input cost inflation. Its quarterly adjusted EBITDA margin was 8.9%, which contracted 10 bps.
Although increased cost inflation remains a concern for the company, it is on track to counter such headwinds by implementing price increases, improving the profitability of lower-margin products and enhancing its branded portfolio through innovation.
Some Top-Ranked Food Bets
Some top-ranked stocks are Conagra Brands (CAG - Free Report) , Lamb Weston (LW - Free Report) and Mondelez International, Inc. (MDLZ - Free Report) .
Conagra, a consumer-packaged goods food company, currently sports a Zacks Rank #1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Conagra’s current fiscal-year sales and earnings suggests growth of 7.2% and 12.7%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, which is a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggests an increase of 19.3% and 89.9%, respectively, from the year-ago reported number.
Mondelez International, which manufactures, markets, and sells snack food and beverage products, carries a Zacks Rank 2. MDLZ has a trailing four-quarter earnings surprise of 7.5%, on average.
The Zacks Consensus Estimate for Mondelez’s current financial year sales and earnings suggests growth of 9% and 7.5%, respectively, from the corresponding year-ago reported figures.