Understanding Flowers Foods, Inc.'s (NYSE:FLO) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Flowers Foods is doing by evaluating its latest earnings with its longer term trend as well as its industry peers' performance over the same period.
Did FLO beat its long-term earnings growth trend and its industry?
FLO's trailing twelve-month earnings (from 28 December 2019) of US$165m has increased by 4.2% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -2.0%, indicating the rate at which FLO is growing has accelerated. What's the driver of this growth? Let's take a look at if it is only attributable to an industry uplift, or if Flowers Foods has experienced some company-specific growth.
In terms of returns from investment, Flowers Foods has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. Furthermore, its return on assets (ROA) of 5.5% is below the US Food industry of 6.0%, 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 9.1%.
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 doesn’t necessarily mean it’s onwards and upwards for the company. You should continue to research Flowers Foods to get a better picture 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 28 December 2019. This may not be consistent with full year annual report figures.
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.
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