How are energy investors positioned?
On Monday, Flowers Foods (NYSE:FLO) shares received a continued Neutral rating from DA Davidson, with a steady price target of $23.00. The bakery company's second-quarter performance showed branded share growth and improved non-branded margins, attributed to ongoing portfolio optimization and cost savings initiatives.
Flowers Foods' second-quarter adjusted EBITDA reached $143.5 million, surpassing the firm's estimate of $141.2 million and the consensus of $138.5 million. Despite this, the company's top line did not meet expectations. Adjusted gross margin saw an increase of 80 basis points year over year to 48.3%, a result of moderating costs for ingredients and packaging, enhanced pricing and mix, and reduced product returns.
The report highlighted that selling, distribution, and administrative expenses rose slightly to 39.6% of total net sales, up from 41.0%. This increase was driven by factors such as higher workforce-related costs, amortization of cloud-based applications, increased rent expense, and lower scrap dough income.
DA Davidson pointed out the competitive landscape in fresh bread as a potential risk factor for the second half of 2024. However, the analyst noted that since the first-quarter miss, Flowers Foods' relative valuation has improved. The stock is currently trading below its historical premium compared to peers, which could present a better risk/reward scenario.
The firm's stance remains neutral on Flowers Foods, with their financial model under review and a moderate upward bias. The detailed analysis of the second-quarter results compared to estimates can be found on page 2 of the report.
InvestingPro Insights
As Flowers Foods (NYSE:FLO) garners attention from DA Davidson's neutral stance and a price target of $23.00, it's beneficial to look at the company through the lens of InvestingPro's real-time data and insights. Flowers Foods has shown a commendable track record of raising its dividend for the past 23 years, with the latest dividend yield standing at a solid 4.23%. This consistent dividend growth, including a 4.35% increase over the last twelve months, underscores the company's commitment to shareholder returns.
The company's financial health is further bolstered by a robust gross profit margin of 49.01% over the last twelve months as of Q2 2024, which aligns with the improved non-branded margins highlighted in the DA Davidson report. Despite trading at a high earnings multiple with a P/E ratio of 37.36, the adjusted P/E ratio for the same period shows a more reasonable figure of 18.18. This could indicate that the market has already factored in the company's growth prospects, which include an expected net income increase this year—a sentiment echoed by analysts who predict profitability for Flowers Foods.
For readers interested in deeper analytical insights, InvestingPro offers additional tips on Flowers Foods, with a total of 7 tips available, including an analysis of the company's liquidity position and profitability over the last twelve months. These InvestingPro Tips can further assist investors in making informed decisions about Flowers Foods' stock. To explore these insights, visit InvestingPro's dedicated page for Flowers Foods at https://www.investing.com/pro/FLO.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.