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1. Company Snapshot

1.a. Company Description

Flowers Foods, Inc.produces and markets packaged bakery products in the United States.It offers fresh breads, buns, rolls, snack cakes, and tortillas, as well as frozen breads and rolls under the Nature's Own, Dave's Killer Bread, Wonder, Canyon Bakehouse, Mrs.


Freshley's, and Tastykake brand names.The company distributes its products through a direct-store-delivery distribution and a warehouse delivery system, as well as operates 46 bakeries comprising 44 owned and two leased.Its customers include mass merchandisers, supermarkets and other retailers, convenience stores, national and regional restaurants, quick-serve chains, retail in-store bakeries, foodservice distributors, food wholesalers, institutions, dollar stores, and vending companies.


The company was formerly known as Flowers Industries and changed its name to Flowers Foods, Inc.in 2001.Flowers Foods, Inc.


was founded in 1919 and is headquartered in Thomasville, Georgia.

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1.b. Last Insights on FLO

Flowers Foods' recent performance was negatively impacted by weaker-than-expected second-quarter sales, execution issues, and private label pressure. The company's decision to exit low-margin units and sharpen its brand focus was overshadowed by category weakness and costs. Despite beating earnings estimates, the company's trimmed fiscal 2025 outlook and lower-than-expected sales raised concerns. According to analysts, the stock faces headwinds from a tough bread market and high leverage. The company's dividend payout ratio has also climbed to an unsustainable 90%, limiting financial flexibility.

1.c. Company Highlights

2. Flowers Foods' Q3 2025 Earnings: Navigating Category Weakness

Flowers Foods reported revenues of $1.07 billion, slightly below analyst estimates, with a gross margin of 35.4% and an EPS of $0.23, in line with expectations. The company's EBITDA margin was impacted by top-line pressure, increased promotional activity, and higher labor costs. As CFO Steve Kinsey noted, "We've had more promotional activity, and Simple Mills, which is 100% co-maned, has a higher cost product." The company's net income was $44.6 million, reflecting a challenging operating environment.

Publication Date: Nov -14

📋 Highlights
  • Portfolio Alignment & Consumer Demand:: Proactive portfolio adjustments are yielding positive results, focusing on "value and better-for-you" products to align with evolving consumer preferences.
  • Margin Pressures:: Gross margin faces challenges from increased promotional activity, higher labor costs, and co-manufactured Simple Mills (100% co-manufactured, higher-cost product) impacting EBITDA margin.
  • Category Stabilization Outlook:: Weakness in bread demand expected to persist into late 2026; normalization anticipated as economy strengthens, with stabilization starting in late 2025.
  • Foodservice Performance:: Despite economic headwinds, profitability improvements from 2–3 years of operational work in foodservice and private label continue to strengthen the bottom line.
  • Bakery Optimization:: Reduced to 44 bakeries, with ongoing focus on removing complexity and optimizing cost structure to enhance efficiency and margins over time.

Category Weakness and Consumer Sentiment

The company's management highlighted that consumer sentiment reached a low point in Q3, with category demand expected to normalize as the economy strengthens. Chairman and CEO Ryals McMullian stated, "We think over time, the category will stabilize. However, we do see the weakness continuing at least partway into '26." The company is focused on bringing value and better-for-you offerings to consumers, with a strong portfolio of brands to drive this transformation.

Operational Efficiencies and Cost Structure

Flowers Foods is evaluating its cost structure and supply chain optimization, aiming to be more efficient. The company has reduced its bakery count to 44 and is focused on removing complexity, increasing focus, and optimizing its cost structure. McMullian noted that investments in bakeries will increase efficiency and rise margins over time.

Outlook and Valuation

Analysts estimate next year's revenue growth at -1.0%. With a P/E Ratio of 12.41, P/B Ratio of 1.7, and Dividend Yield of 8.56%, the company's valuation appears reasonable. The EV/EBITDA ratio of 9.74 suggests that the company's enterprise value is relatively in line with its EBITDA. As the company navigates category weakness, its focus on operational efficiencies and cost structure optimization will be crucial in driving future growth.

Foodservice and Private Label Business Performance

The foodservice business has been under pressure due to the economic environment and consumer sentiment. However, the work done over the last 2-3 years to improve the profitability of that business is still delivering positively on the bottom line. The company is managing its businesses effectively, despite the challenging environment.

3. NewsRoom

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Flowers Foods, Inc. $FLO Shares Purchased by Capital Fund Management S.A.

Dec -04

Source: defenseworld.net

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Dave's Killer Bread launches Supreme Sourdough

Nov -17

Source: prnewswire.com

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FLOWERS FOODS DECLARES QUARTERLY DIVIDEND

Nov -14

Source: prnewswire.com

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Flowers Foods: Still Too Much Baked Into The Stock - Sell Until The Dividend Is Cut

Nov -13

Source: seekingalpha.com

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Flowers Foods, Inc. (FLO) Q3 2025 Earnings Call Prepared Remarks Transcript

Nov -11

Source: seekingalpha.com

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High Potential In Low Vol? These Dividends Up To 8.6% Payers Think So

Nov -10

Source: forbes.com

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Flowers Foods Q3 Earnings Meet Estimates, Revenues Increase 3% Y/Y

Nov -07

Source: zacks.com

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Flowers Foods, Inc. (FLO) Q3 2025 Earnings Call Transcript

Nov -07

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.14%)

6. Segments

Branded Retail

Expected Growth: 2.5%

Flowers Foods' Branded Retail segment growth of 2.5% is driven by increasing demand for convenient, portable snacks, and premium baked goods. Strong brand recognition, innovative product offerings, and strategic pricing initiatives contribute to the growth. Additionally, the company's focus on e-commerce and omnichannel distribution expands its reach, further boosting sales.

Other

Expected Growth: 1.5%

Flowers Foods, Inc.'s 'Other' segment growth of 1.5% is driven by increasing demand for specialty and snack foods, expansion of e-commerce channels, and strategic acquisitions. Additionally, the company's focus on innovation, product diversification, and cost savings initiatives contribute to this growth.

7. Detailed Products

Bread

Fresh bread products, including white bread, whole wheat bread, and buns

Snack Cakes

Sweet baked goods, including snack cakes, donuts, and pastries

Frozen Baked Goods

Frozen bread, buns, and sweet baked goods for in-store bakeries and foodservice

Specialty Bread

Artisanal bread, baguettes, and other specialty bread products

Cake and Icing

Cake mixes, icings, and decorations for retail and foodservice

8. Flowers Foods, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Flowers Foods, Inc. is medium due to the presence of alternative baked goods and snack products from other companies.

Bargaining Power Of Customers

The bargaining power of customers is low due to the company's strong brand recognition and wide distribution network, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the company's dependence on a few large suppliers for raw materials, but the company's scale and diversification mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the baked goods and snack industry, including significant capital requirements and established distribution networks.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the baked goods and snack industry, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 44.77%
Debt Cost 3.95%
Equity Weight 55.23%
Equity Cost 5.78%
WACC 4.96%
Leverage 81.06%

11. Quality Control: Flowers Foods, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

10.78$

Current Price

10.78$

Potential

-0.00%

Expected Cash-Flows