Flowers Foods Inc (NYSE: FLO)

Sector: Consumer Defensive Industry: Packaged Foods CIK: 0001128928
Market Cap 2.01 Bn
P/B 1.61
P/E 13.42
P/S 0.51
ROIC (Qtr) 6.60
Div Yield % 9.50
Rev 1y % (Qtr) 3.02
Total Debt (Qtr) 2.12 Bn
Debt/Equity (Qtr) 1.49
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About

Investment thesis

Bull case

  • Operating cash flow of 451.12M provides strong 14.02x coverage of stock compensation 32.19M, indicating sustainable incentive practices.
  • Robust free cash flow of 326.02M exceeds capital expenditure of 125.09M by 2.61x, indicating strong organic growth funding capability.
  • Operating cash flow of 451.12M fully covers other non-current liabilities 328.75M by 1.37x, showing strong long-term stability.
  • Tangible assets of 2.17B provide robust 13.20x coverage of other current liabilities 164.56M, indicating strong asset backing.
  • Retained earnings of 971.41M provide strong 5.90x coverage of other current liabilities 164.56M, indicating earnings quality.

Bear case

  • Operating cash flow of 451.12M barely covers its investment activities of (955.12M), with a coverage ratio of -0.47, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 16.73M against inventory of 299.42M, the 0.06 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 451.12M provides thin coverage of dividend payments of (207.58M) with a -2.17 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 16.73M provide limited coverage of acquisition spending of (785.62M), which is -0.02x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 323.65M show weak coverage of depreciation charges of 165.78M, with a 1.95 ratio indicating high capital intensity and potential reinvestment needs.

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Packaged Foods
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 KHC Kraft Heinz Co 28.20 Bn -4.82 1.13 21.22 Bn
2 GIS General Mills Inc 26.99 Bn 20.72 1.54 13.73 Bn
3 JBS Jbs N.V. 17.81 Bn 10.08 0.23 23.92 Bn
4 MKC Mccormick & Co Inc 16.10 Bn 44.21 3.77 4.00 Bn
5 HRL Hormel Foods Corp /De/ 12.37 Bn 18.03 1.34 2.86 Bn
6 SJM J M SMUCKER Co 11.08 Bn 19.60 1.97 7.91 Bn
7 PPC Pilgrims Pride Corp 10.32 Bn 9.54 0.56 3.29 Bn
8 MICC Magnum Ice Cream Co N.V. 9.71 Bn 28.17 1.04 4.02 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.66 1.47
EV to Cash from Ops. EV/CFO 9.63 29.75
EV to Debt EV to Debt 1.35 27.85
EV to EBIT EV/EBIT 15.41 86.88
EV to EBITDA EV/EBITDA 10.44 -156.20
EV to Free Cash Flow [EV/FCF] EV/FCF 10.71 -5.67
EV to Market Cap EV to Market Cap 1.42 1.15
EV to Revenue EV/Rev 0.73 7.32
Price to Book Value [P/B] P/B 1.61 8.48
Price to Earnings [P/E] P/E 13.42 14.45
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.93 4.58
Dividend Payout Ratio % Div Payout % (Qtr) 104.90 3.76
Dividend per Basic Share Div per Share (Qtr) 0.98 0.65
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 63.29 22.76
Interest Coverage Int. cover (Qtr) 4.98 6.64
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -7.26 -118.07
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 11.73 43.48
Dividend Growth (1y) % Div 1y % (Qtr) 3.83 0.66
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -9.70 -48.16
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -4.85 -152.35
EBIT Growth (1y) % EBIT 1y % (Qtr) -8.90 -50.79
EBT Growth (1y) % EBT 1y % (Qtr) -18.67 -54.94
EPS Growth (1y) % EPS 1y % (Qtr) -19.13 -28.10
FCF Growth (1y) % FCF 1y % (Qtr) 26.47 7.02
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -0.47 439.70
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.18 1.01
Cash Payout Ratio Cash Payout (Qtr) 0.36 0.12
Cash Ratio Cash Ratio (Qtr) 0.02 0.86
Current Ratio Curr Ratio (Qtr) 0.79 2.60
Debt to Equity Ratio Debt/Equity (Qtr) 1.49 2.21
Interest Cover Ratio Int Coverage (Qtr) 4.98 6.64
Times Interest Earned Times Interest Earned (Qtr) 4.98 6.64
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 9.50 -919.13
EBIT Margin % EBIT Margin % (Qtr) 6.30 -1,474.87
EBT Margin % EBT Margin % (Qtr) 5.04 -1,537.76
Gross Margin % Gross Margin % (Qtr) 48.90 26.98
Net Profit Margin % Net Margin % (Qtr) 3.80 -1,538.60