Flowers Foods stock hits 52-week low at $17.98 amid market shifts

In a challenging economic climate, Flowers Foods , Inc. (NYSE:FLO) has experienced a notable downturn, with its stock price touching a 52-week low of $17.98. According to InvestingPro analysis, the company maintains strong fundamentals with a healthy 5.28% dividend yield and has raised its dividend for 11 consecutive years. This latest price level reflects a significant retreat from more favorable valuations over the past year, with the company’s shares witnessing a 1-year change of -22.59%. Despite market pressures, InvestingPro data shows the company maintains strong financial health with liquid assets exceeding short-term obligations and a solid gross profit margin of 49.5%. Investors are closely monitoring Flowers Foods as it navigates through market headwinds, including fluctuating commodity prices and shifting consumer trends, which have collectively exerted pressure on the stock. The bakery goods manufacturer, known for brands such as Nature’s Own and Tastykake, is now grappling with the task of revitalizing its growth strategy in the face of these persistent challenges. InvestingPro analysis suggests the stock is currently undervalued, trading at an attractive P/E ratio of 15.4x relative to its near-term earnings growth potential. For deeper insights into FLO’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, Flowers Foods Inc. has announced the issuance of senior notes to fund its acquisition of Purposeful Foods Holdings, Inc., the parent company of Simple Mills, Inc. The company plans to raise capital through the sale of 5.750% Senior Notes due 2035 and 6.200% Senior Notes due 2055, with interest payments beginning in September 2025. This acquisition, valued at $795 million, is expected to close in the first quarter of 2025. Fitch Ratings downgraded Flowers Foods to ’BBB-’ from ’BBB’ due to the increased leverage from the all-debt financing of this acquisition. Similarly, Moody’s Ratings downgraded the company’s long-term issuer rating from Baa2 to Baa3, citing a rise in debt-to-EBITDA leverage.

S&P Global has also revised its outlook for Flowers Foods to negative, maintaining a ’BBB’ issuer credit rating while expressing concerns over the company’s increased leverage. DA Davidson analyst Brian Holland adjusted the price target for Flowers Foods shares to $21, maintaining a Neutral rating. The analyst noted challenges in the packaged bakery sector and highlighted the strategic acquisition of Simple Mills as a high-cost move without clear synergies. Despite these developments, Flowers Foods aims to diversify its product portfolio and improve cash flow, with expectations of deleveraging in the coming years.

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