SC, Hope you aren't getting hit too bad from these storms. Here in PA it's only some rain and wind gusts to 45 mph, so will likely just be some trees down.
Btw, I saw this FLO article today. They settled the class action suit but still have some residual uncertainty from the ongoing Labor Dept review. But over the long haul FLO should be a solid stock to hold while collecting the dividend. Speaking of dividends, I'm in the process updating my Dividend Stocks board, with high div stocks (yielding 3% - 7%) broken down by market cap and sector - http://investorshub.advfn.com/Dividend-Stocks-28771/
>>> Flowers Foods' Growth Story Intact Despite Legal Woes
Although Flowers Foods, Inc. (NYSE: FLO) may report lackluster results for Q4 2016, its performance will likely improve in the first quarter of 2017 against easier comps, Wunderlich’s Mitchell B. Pinheiro said in a report. He added that the company could exceed the current investor expectations for 2017, “which to us is a solid set-up for stock performance.”
Pinheiro initiated coverage of Flowers Foods with a Buy rating and a price target of $24.
Legal Woes
On December 9, 2016, the company agreed to a settlement with its largest class action lawsuit for $9 million. Although the Department of Labor review is ongoing, “the incoming pro-business Trump administration could mitigate this regulatory risk,” Pinheiro mentioned.
Legal expenses related to these issues are estimated at ~$15 million range in 2016, with the levels being similar in 2017. Higher legal cost is likely to have adversely impacted the company’s 2016 margins by 30–40 basis points and could continue to be a drag in 2017.
Long-Term Growth Story Intact
Flowers Foods could continue to gain market share, given its “competitive strengths and expanded addressable market,” which would likely enable the company to achieve “an attractive revenue and earnings growth profile and higher asset returns over time,” the analyst commented.
Terming Flowers Foods as a “proven, consistent, long-term consumer staples growth story,” Pinheiro noted that the company had a ten-year revenue and net income compounded annual growth rate of 8 percent and 10 percent, respectively.
Moreover, free cash flow as a percentage of revenue had averaged 5.0 percent over the past ten years and 6.4 percent over the past three years, “despite continued aggressive capital investment.” This had allowed Flowers Foods to pursue “a steady acquisition cadence while maintaining conservative balance sheet leverage,” the analyst stated.
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