FLO  Flowers Foods Inc.

Exchange

NYSE

Sector

Consumer Non-Durables

Industry

Packaged Foods

Market Cap.

4.10B

Vuru Grade

52.27/100

Current Price

$19.61
-0.24 (-1.21%)

Growth Price

$16.21
Overvalued by 17.33%

Stability Price

$10.78
Overvalued by 45.03%

Company Metrics

  • P/E 25.14
  • P/S 1.06
  • P/B 3.42
  • EPS 0.78
  • Cash ROIC 9.50%
  • Cash Ratio 0.02
  • Dividend 0.64 / 3.23%
  • Avg. Vol. 1.40M
  • Shares 209.08M
  • Market Cap. 4.10B

Company Description

Flowers Foods, Inc. produces and markets bakery products in the United States. It operates in two segments, Direct-Store-Delivery (DSD) and Warehouse Delivery. The DSD segment produces and markets fresh and frozen packaged bread and rolls, tortillas, sandwich rounds, thin sliced bagels, and whole grain white bread under the brand names of Flowers Foods, Nature's Own, Whitewheat, Cobblestone Mill, ... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Flowers Foods: Irrational Sell-Off After Fourth-Quarter Earnings
Seeking Alpha - Feb 16, 2017
On February 14, 2017, Flowers Foods (NYSE:FLO) reported earnings for the fourth quarter and fiscal year of 2016. Despite it being Valentine's Day, investors did not love the stock after the company's earnings announcement. Flowers Foods stock dropped ...
Flowers Foods, Inc. Reports Fourth Quarter and Year-End 2016 Results - PR Newswire (press release)
Why Flowers Foods, Inc. Shares Dropped 10%
Motley Fool - Aug 11, 2016
What: Shares of Flowers Foods, Inc. (NYSE:FLO) were taking a dive today after the owner of brands including Wonder Bread and TastyKake said second-quarter profit fell, and it lowered its full-year guidance.
Flowers Foods Faces Fair-Labor Review - Wall Street Journal
Flowers Foods: Sharp Price Decline Creates Opportunity - Seeking Alpha
Why Flowers Foods, Inc. Stock Slipped 19% Last Month
Motley Fool - Sep 6, 2016
Shares of Flowers Foods, Inc. (NYSE:FLO) tumbled last month, falling 19% according to data from S&P Global Market Intelligence.
Flowers Foods: Big Gains Following Litigation Settlement
Seeking Alpha - Dec 16, 2016
Flowers Foods (NYSE:FLO) definitely fits this bill. A bakery business with a market capitalization of ~$4 billion, this company is a darling of dividend growth investors. It's not hard to see why - with a dividend yield of >3% and 29 years of steady or ...
Pivotal Research Upgrades Flowers Foods to 'Hold' - Market Realist
Analyst Viewpoints on Rating and Recommendation: Flowers Foods, Inc. (NYSE:FLO) - Post Registrar
Flowers Foods: Collecting A 9% Yield Or 20% Gain
Seeking Alpha - Jan 15, 2017
Flowers Foods is a baking company going on 100 years of history. You'd probably better recognize the firm by some of its branded products like Nature's Own, Home Price or Wonder Bread.
Flowers Foods: Caution Ahead
Seeking Alpha - Sep 29, 2016
According to Q2 results, sales have increased 5.2% to $935.0 million, with Flower Foods foray into the organic bread market through its acquisitions of Dave's Killer Bread and Alpine Valley Bread contributed 5.6% to the overall sales increase ...
Flowers Foods: With The Suit Settled, Will The Dough Keep Rising?
Seeking Alpha - Dec 29, 2016
This article is presented as an update to an article I published on Flowers Foods (NYSE:FLO) on September 22, 2016. Later in this ... In the long run, a company's stock price will be driven by the operating success that the business behind the stock ...
Flowers Foods (FLO) Q3 2016 Results - Earnings Call Transcript
Seeking Alpha - Nov 10, 2016
Welcome to the Flowers Foods Third Quarter 2016 Earnings Conference Call and Webcast. My name is Ellen and I will be your operator for today's call.
Flowers Foods, Inc. Reports Third Quarter 2016 Results - VendingMarketWatch
Flowers Foods Investors Have Nothing To Fear From The DOL Investigation
Seeking Alpha - Aug 26, 2016
The other, much more salient reason for the large price drop is that Flowers Foods is under investigation by the Department of Labor.
Flowers Foods launches 'Project Centennial' to boost profits in 2017
Atlanta Business Chronicle - Nov 13, 2016
The CEO of Flowers Foods Inc. (NYSE: FLO) says the bakery giant's results aren't cutting it. So the company has launched a comprehensive enterprise-wide business and operational review that it calls "Project Centennial" to grow sales and improve profits.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for FLO to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate FLO's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$19.61 Current Price

$16.21 Growth Price (DCF)

Overvalued by 17.33%


Growth Rate Assumed by Market: 15.08%


Future Free Cash Flow Growth Rate: 8.2%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$10.78 Stability Price (EPV)

Overvalued by 45.03%


Discount Rate: 15.0%

$19.11 Book Price

Fairly valued


Poor Cash Return on Invested Capital over the past 5 years

FLO has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

FLO has only created $9.50 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 149.62M 171.30M 230.19M 228.46M 244.32M
divided by
Invested Capital 1.63B 2.17B 2.09B 2.47B 2.41B
Cash ROIC 9.19% 7.90% 11.04% 9.26% 10.12%

Excellent Return on Equity over the past 5 years

Over the past 5 years, FLO has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

FLO has generated $16.34 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 136.12M 230.89M 175.74M 189.19M 163.78M
divided by
Stockholders' Equity 858.62M 1.08B 1.12B 1.24B 1.21B
Return on Equity 15.85% 21.45% 15.65% 15.22% 13.53%

Excellent Business Performance over the past 10 years

FLO has been able to maintain profitability in good times and bad. This could mean FLO has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

FLO has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 126.47M 8.01M 163.92M 207.65M 55.13M 149.62M 171.30M 230.19M 228.46M 244.32M

Weak Balance Sheet

FLO's financial position is not ideal. The key is to check whether FLO is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 19.98M 19.96M 18.95M 6.76M 7.78M 13.28M 8.53M 7.52M 14.38M 6.41M
Current Assets 269.23M 352.24M 338.96M 313.71M 378.57M 464.45M 487.41M 460.56M 537.52M 476.84M
Total Assets 987.54M 1.35B 1.35B 1.33B 1.55B 2.00B 2.50B 2.41B 2.89B 2.76B
Current Liabilities 213.65M 265.07M 221.77M 242.77M 268.42M 354.96M 327.78M 315.55M 403.74M 340.62M
Total Liabilities 331.32M 718.53M 635.50M 529.70M 795.03M 1.14B 1.43B 1.29B 1.64B 1.55B
Stockholder' Equity 656.22M 634.72M 715.95M 795.79M 758.97M 858.62M 1.08B 1.12B 1.24B 1.21B
Current Ratio 1.26 1.33 1.53 1.29 1.41 1.31 1.49 1.46 1.33 1.40
TL-to-TA 0.34 0.53 0.47 0.40 0.51 0.57 0.57 0.53 0.57 0.56

Consistent Reinvestment of Profits over the past 10 years

FLO has consistently retained profits. This may put FLO in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, FLO can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 303.39M 369.40M 437.52M 503.69M 548.00M 597.63M 735.63M 809.07M 877.82M 910.52M
Retained Earnings Growth - 21.76% 18.44% 15.12% 8.80% 9.06% 23.09% 9.98% 8.50% 3.73%

Highly Competitive Industry over the past 10 years

It's likely that FLO is in an industry with low barriers to entry, spurring high competition. If Gross Margins are at least satisfactory, it's likely FLO invests heavily in R&D and Sales, General & Administrative expenses.

Only $4.89 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 94.62M 119.23M 130.30M 137.05M 123.43M 136.12M 230.89M 175.74M 189.19M 163.78M
divided by
Revenue 2.04B 2.41B 2.60B 2.57B 2.77B 3.05B 3.75B 3.75B 3.78B 3.93B
Net Profit Margin 4.65% 4.94% 5.01% 5.32% 4.45% 4.47% 6.16% 4.69% 5.01% 4.17%

Varying Pricing Power over the past 10 years

FLO has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. However, there is a substantial variation in their Gross Profit Margins from year-to-year, which indicates inconsistent performance. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$52.96 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 997.66M 1.15B 1.21B 1.23B 2.77B 1.43B 1.78B 1.80B 1.82B 1.90B
divided by
Revenue 2.04B 2.41B 2.60B 2.57B 2.77B 3.05B 3.75B 3.75B 3.78B 3.93B
Gross Margin 48.98% 47.66% 46.55% 47.67% 100.00% 46.90% 47.42% 47.97% 48.04% 48.40%

High Capital Intensity over the past 10 years

FLO spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

61.00% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 88.13M 86.86M 72.09M 98.40M 79.16M 67.26M 99.18M 83.78M 95.77M 101.73M
divided by
Net Income 94.62M 119.23M 130.30M 137.05M 123.43M 136.12M 230.89M 175.74M 189.19M 163.78M
Capital Expenditure Ratio 93.14% 72.85% 55.33% 71.80% 64.14% 49.41% 42.96% 47.67% 50.62% 62.11%

Very Strong Dividend History over the past 10 years

FLO has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests FLO is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 42.12M 53.22M 62.17M 70.88M 79.08M 86.49M 92.84M 102.30M 120.44M 131.07M
divided by
Shares Outstanding 92.37M 93.04M 92.73M 92.11M 136.88M 207.67M 211.93M 213.09M 213.36M 210.35M
Dividend Paid Per Share 0.46 0.57 0.67 0.77 0.58 0.42 0.44 0.48 0.56 0.62
Price at Year End 14.26 14.66 14.99 17.47 18.98 22.94 21.57 19.62 21.81 19.97
Dividend Yield 3.20% 3.90% 4.47% 4.40% 3.04% 1.82% 2.03% 2.45% 2.59% 3.12%

History of Stock Buybacks over the past 10 years

FLO has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 92.37M 93.04M 92.73M 92.11M 136.88M 207.67M 211.93M 213.09M 213.36M 210.35M
Stock Bought Back - -0.72% 0.33% 0.68% -32.71% -34.09% -2.01% -0.55% -0.12% 1.43%
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