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SunTrust Downgrades Flowers Foods to ‘Neutral’

Gabriel Kane

Yesterday’s Consumer Pops and Drops: FLO, BG, KMB, RAI, TEN, THS

(Continued from Prior Part)

Price movement of Flowers Foods

Flowers Foods (FLO) has a market cap of $3.6 billion. FLO fell by 19.7% to close at $16.81 per share as of February 11, 2016. The price movements on weekly, monthly, and year-to-date (or YTD) bases are -17.3%, -23.1%, and -21.8%, respectively.

Technically, the stock has broken the support and is trading below all moving day averages. Currently, FLO is trading 17.7% below its 20-day moving average, 21.3% below its 50-day moving average, and 25.8% below its 200-day moving average.

The Vanguard S&P Mid-Cap 400 Value ETF (IVOV) invests 0.70% of its holdings in Flowers Foods. The ETF tracks an index of primarily mid-cap US stocks. The index uses three factors to select value stocks from the 400 stocks chosen by the S&P Committee. The YTD price movement of IVOV is -9.0% as of February 10, 2016.

The Guggenheim S&P Mid-Cap 400 Pure Growth ETF (RFG) invests 0.68% of its holdings in Flowers Foods. The ETF tracks a factor-weighted index of the S&P 400 companies exhibiting the strongest growth factors.

The market cap of Flowers Foods’ competitors are as follows:

  • Campbell Soup (CPB) — $17.8 billion
  • Panera Bread (PNRA) — $4.8 billion

SunTrust downgraded Flowers Foods

SunTrust Robinson Humphrey has downgraded Flowers Foods from “buy” to “neutral.” It reduced the price target to $20 from $30 per share.

Performance of Flowers Foods in fiscal 4Q15 and fiscal 2015

Flowers Foods reported fiscal 4Q15 sales of $858.4 million, a fall of 2.2% compared to sales of $877.3 million in fiscal 4Q14. Sales of direct-store delivery fell by 3.7%, and sales of warehouse delivery rose by 6.1% in fiscal 4Q15 compared to fiscal 4Q14. It reported impairment of assets of $1.5 million in fiscal 4Q15 compared to $5.8 million in fiscal 4Q14.

Its net income and EPS (earnings per share) rose to $32.2 million and $0.15, respectively, in fiscal 4Q15, compared to $28.0 million and $0.13, respectively, in fiscal 4Q14.

Fiscal 2015 results

In fiscal 2015, FLO reported sales of $3,778.5 million, a rise of 0.79% YoY (year-over-year). Its net income and EPS rose to $189.2 million and $0.89, respectively, in fiscal 2015, compared to $175.7 million and $0.82, respectively, in fiscal 2014.

It reported cash and cash equivalents and long-term debt of $14.4 million and $1,243.1 million, respectively, in fiscal 2015.

The company repurchased 0.3 million shares at an average price of $21.54 per share. There are 13.7 million shares remaining on its share repurchase program.

The PE (price-to-earnings) and PBV (price-to-book value) ratios of Flowers Foods are 19.3x and 2.9x, respectively, as of February 11, 2016.

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