Since Flowers Foods Inc (NYSE:FLO) released its earnings in July 2018, analyst consensus outlook appear vastly optimistic, with earnings expected to grow by a high double-digit of 52% in the upcoming year, relative to the previous 5-year average growth rate of -9.5%. Presently, with latest-twelve-month earnings at US$142m, we should see this growing to US$215m by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Exciting times ahead?
The 7 analysts covering FLO view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for FLO, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2021, FLO’s earnings should reach US$267m, from current levels of US$150m, resulting in an annual growth rate of 14%. This leads to an EPS of $1.2 in the final year of projections relative to the current EPS of $0.72. The bottom-line growth seems to be caused by reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. In 2021, FLO’s profit margin will have expanded from 3.8% to 6.4%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Flowers Foods, I’ve put together three pertinent aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Flowers Foods worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Flowers Foods is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Flowers Foods? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.