Flowers Foods (NYSE: FLO) is
a leading producer and marketer of packaged bakery foods for retail and foodservice customers. The firm's Bakeries division makes bread, rolls, buns and other bakery items for distribution throughout the southern U.S. Its Specialty division makes snack cakes and frozen bread products for retail and vending customers nationwide. Among the company's top brands are Nature's Own, Cobblestone Mill, Sunbeam, Blue Bird, and Mrs. Freshley's. Clients include Burger King (NYSE: BKC) and Wendy's International (NYSE: WEN).
Flowers Foods surprised the Street late last month, when it reported Q4 EPS of 23 cents and revenues of $473.7 million. Analysts had been expecting 21 cents and $468.8 million. Management also guided FY08 EPS to $1.07-$1.17 ($1.12 consensus) and FY08 revenues to $2.21-$2.258 billion ($2.2B consensus).
The FLO
share price popped through major moving average resistance on the news and has since been defining a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with five "strong buys", one "buy" and three "holds". The FLO Price to Sales ratio (1.10), Price to Book ratio (3.45), Price to Cash Flow ratio (13.66), Price to Free Cash Flow ratio (26.60), EPS Growth rate (35.29%), Return on Assets (10.37%) and Return on Investment (13.25%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 70% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $18.30 and $25.75. A stop-loss of $20.85 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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