On Thursday, Deutsche Bank adjusted its financial outlook for Flowers Foods (NYSE:FLO) shares, increasing the company's price target to $23 from $22, while maintaining a Hold rating on the stock. The adjustment comes amid expectations of a robust performance for the first quarter and the full year 2024.
The bank cites Flowers Foods' positioning for a solid quarter, which has led to a slight increase in the first quarter and full-year 2024 estimates, now slightly above the consensus.
This optimism is bolstered by positive consumption data, showing U.S. tracked channel sales growth of 2.8% year-over-year in the first quarter, compared to a 1.2% increase in the fourth quarter of 2023.
This growth, coupled with a nearly flat volume and a roughly 1-point gain in market share compared to the same period last year, suggests a positive outlook for the company.
Flowers Foods' cost-saving initiatives and the easing of input inflation are expected to improve gross margins and support planned growth investments.
Despite potential variability in untracked channel dynamics and other cost factors, Deutsche Bank anticipates a strong start to the fiscal year, with the first quarter being the largest for Flowers Foods, spanning 16 weeks.
The bank's updated earnings per share (EPS) estimate for the first quarter moves to $0.41 from $0.40, aligning with the Street's estimate of $0.40. The full-year EPS forecast has also been raised to $1.25 from $1.23, slightly above the Street's forecast of $1.24.
Deutsche Bank's revised price target reflects a cautious but optimistic view for the company's performance, considering management's full-year guidance of $1.20-$1.30 EPS, which already accounts for potential caution in the latter half of the year due to an uncertain consumer and promotional environment.
InvestingPro Insights
As Flowers Foods (NYSE:FLO) navigates through its fiscal year, investors are closely monitoring the company's financial health and market performance. According to InvestingPro, Flowers Foods stands out with a consistent track record of dividend growth, having raised its dividend for 10 consecutive years and maintained payments for 23 consecutive years. This is a testament to the company's commitment to shareholder returns and financial stability.
The company's market capitalization is currently at $5.3 billion, with a forward P/E ratio for the last twelve months as of Q4 2023 at 20.41, indicating investor expectations for future earnings growth. Additionally, the gross profit margin for the same period stands strong at 48.3%, showcasing the company's ability to retain a significant portion of its revenue as gross profit.
InvestingPro Tips highlight that analysts are optimistic about Flowers Foods' prospects, expecting net income growth this year. This aligns with the positive outlook expressed by Deutsche Bank, suggesting that the company is on track for a profitable year. For investors seeking more in-depth analysis, InvestingPro offers additional insights, including 6 more tips about Flowers Foods' financial performance and market valuation. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and explore these valuable insights to inform your investment decisions.
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