Flowers Foods Inc.FLO

Morningstar Rating

Stock Research and Analysis

by Erin Swanson, CFA

We remain impressed by the fact that Flowers Foods continues to perform well in what has been a challenging segment of the packaged-foods industry. Companies in the baking segment have been plagued by an unprecedented increase in commodity costs, an Read more

Bulls Say

In an effort to withstand the pressures of rising commodity costs, Flowers has successfully passed through price increases--an impressive feat, given the highly competitive nature of the industry.

Flowers has been successful expanding its customer base, as well as its geographic reach through targeted acquisitions adjacent to its existing territories.

Branded products account for about 60% of Flowers' bakery segment sales. Its Nature's Own brand is the best-selling brand of soft variety bread in the United States, despite being available to only 38% of the population. Read more

Bears Say

Commodity-cost inflation has risen to unprecedented levels. We don't believe the firm will be immune from these powerful forces over the long term.

The baking industry is extremely competitive, and rival Sara Lee SLE is even more focused on its core brands, including Earth Grains. Flowers may find efforts to increase market share quite challenging.

If economic conditions continue to weigh on the pocketbooks of consumers, private-label sales may increase at the expense of branded sales, negatively affecting Flowers' profitability. Read more

Strategy

In response to rising commodity costs, Flowers has been focused on cost minimization. The firm is enhancing its efficiency through investments in the automation of its distribution and production capabilities. Read more

Management

Industry experience is definitely not lacking at Flowers Foods. On average, the members of the executive management group possess more than 25 years of service at the firm or its predecessor. We are also encouraged by the share ownership of directors Read more

Profile

Flowers Foods can trace its origins as a regional bakery operation all the way back to 1919. Since that time, the company has expanded its product offerings and geographic Read more

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