For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Flowers Foods, Inc. (NYSE:FLO) useful as an attempt to give more color around how Flowers Foods is currently performing.
How Did FLO’s Recent Performance Stack Up Against Its Past?
FLO’s trailing twelve-month earnings (from 29 December 2018) of US$157m has increased by 5.2% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -5.6%, indicating the rate at which FLO is growing has accelerated. What’s enabled this growth? Well, let’s take a look at if it is solely due to industry tailwinds, or if Flowers Foods has seen some company-specific growth.
In terms of returns from investment, Flowers Foods has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 5.8% is below the US Food industry of 7.1%, indicating Flowers Foods’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Flowers Foods’s debt level, has declined over the past 3 years from 13% to 11%.
What does this mean?
Flowers Foods’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Recent positive growth isn’t always indicative of a continued optimistic outlook. There may be variables that are affecting the entire industry thus the high industry growth rate over the same time frame. I suggest you continue to research Flowers Foods to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for FLO’s future growth? Take a look at our free research report of analyst consensus for FLO’s outlook.
- Financial Health: Are FLO’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 29 December 2018. This may not be consistent with full year annual report figures.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.