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Flowers Foods (FLO) Readies for Q2 Earnings: Things to Note

·5 min read

Flowers Foods, Inc. FLO is likely to register top-line growth when it reports second-quarter fiscal 2022 earnings on Aug 11. The Zacks Consensus Estimate for quarterly revenues is pegged at $1,133 million, suggesting a rise of 11.4% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for quarterly earnings has remained unchanged in the past 30 days at 27 cents per share, indicating a 15.6% decline from the figure reported in the prior-year quarter. This packaged bakery products company has a trailing four-quarter earnings surprise of 10.3%, on average. FLO delivered an earnings surprise of 15.8% in the last reported quarter.

Flowers Foods, Inc. Price, Consensus and EPS Surprise

Flowers Foods, Inc. Price, Consensus and EPS Surprise
Flowers Foods, Inc. Price, Consensus and EPS Surprise

Flowers Foods, Inc. price-consensus-eps-surprise-chart | Flowers Foods, Inc. Quote

Factors to Note

Flowers Foods is battling major hurdles due to cost inflation and supply-chain bottlenecks.  In the first quarter of fiscal 2022, materials, supplies, labor and other production costs (excluding depreciation and amortization) escalated by 110 basis points (bps) to 50.5%. This resulted from increased ingredient and packaging expenses, which led the gross margin to contract 110 bps. Selling, distribution and administrative expenses came in at 38.6% of sales, up 10 bps, due to escalated consulting costs and transportation cost inflation. On its last earnings call, management stated that it expects high-single-digit to low-double-digit cost increases for the year. This also raises concerns for the quarter under review.

Though the company has undertaken price increases to counter shortages and dynamic commodity prices, it expects the pricing action to come into effect in the fiscal second quarter. Incidentally, the price lag and supply-chain disruptions are likely to hurt earnings per share (EPS) by 5 cents in total in the fiscal second and third quarters.

That said, Flowers Foods’ focus on core priorities bodes well. The priorities include developing its team, concentrating on brands, prioritizing margins and looking out for prudent mergers and acquisitions. To this end, management has been shifting its focus toward becoming a more brand-focused company. The company has been undertaking innovation in its leading brands, which have been yielding well.

Another factor aiding Flowers Foods’ performance is strength in non-retail and other sales. Although non-retail and other sales remain lower than pre-pandemic levels, FLO is seeing continued recovery with stronger margins.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Flowers Foods this time. 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, which is not the case here.

Flowers Foods carries a Zacks Rank #2 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat.

Dollar General DG currently has an Earnings ESP of +0.99% and a Zacks Rank #2. DG is expected to register top and bottom-line growth when it reports second-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for Dollar General’s quarterly revenues is pegged at $9.4 billion, which suggests growth of 8.4% from the prior-year quarter’s reported figure. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Dollar General’s quarterly earnings has moved a penny up in the past seven days to $2.92 per share, suggesting an improvement of 8.6% from the year-ago quarter’s tally. DG delivered an earnings beat of 2.8%, on average, in the trailing four quarters.

Ulta Beauty ULTA currently has an Earnings ESP of +3.27% and a Zacks Rank #2. The company is likely to register a bottom-line improvement when it reports second-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for the quarterly EPS of $4.84 suggests an improvement from the $4.56 reported in the year-ago quarter.

Ulta Beauty's top line is also expected to have risen year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $2.2 billion, which indicates an improvement of 11.7% from the figure reported in the prior-year quarter. ULTA has a trailing four-quarter earnings surprise of 49.8%, on average.

Ollie's Bargain Outlet OLLI currently has an Earnings ESP of +6.06% and a Zacks Rank of 3. The company is likely to register a rise in the top line when it reports second-quarter fiscal 2022 results. The Zacks Consensus Estimate for OLLI’s quarterly revenues is pegged at $457.5 million, which suggests a jump of 10% from the figure reported in the prior-year quarter.

The consensus mark for Ollie's Bargain’s quarterly earnings has remained unchanged at 33 cents per share in the past 30 days. The consensus estimate for OLLI’s quarterly earnings suggests a decline of 36.5% from the year-ago quarter’s reported figure. Ollie's Bargain delivered a negative earnings surprise of 17.1%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Dollar General Corporation (DG) : Free Stock Analysis Report
 
Ulta Beauty Inc. (ULTA) : Free Stock Analysis Report
 
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Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
 
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