Flowers Foods (FLO) Stock Gets ‘Sector Weight’ Rating at Keybanc
NEW YORK (TheStreet) -- Flowers Foods (FLO) - Get Report stock was initiated with a "sector weight" rating at Keybanc on Thursday morning.
The Thomasville, GA-based company is a producer and marketer of bakery products.
"Our more cautious stance is driven by our view that competitive dynamics will weigh on volume reacceleration against tough 2Q16/3Q16 compares, creating a more back-end loaded cadence, compounded by headline/expense risk surrounding the recent string of class action lawsuits," the firm wrote in a note to investors.
While valuation appears attractive compared to peers, the confluence of industry sluggishness, competition and headline risk keeps the firm on the sidelines.
Better earnings and margin visibility serving as a catalyst would make Keybanc more constructive.
"These dynamics aside, input costs remain favorable, $0.10+ per share is currently locked up in cost headwinds that should begin to abate into 2017 and significant out-year earnings power is embedded within FLO's underutilized DSD network ($1.50+ by 2020)," the firm said.
Shares of Flowers Foods closed at $18.33 on Wednesday.
Separately, TheStreet Ratings Team has a "Buy" rating with a score of B- on the stock.
The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, reasonable valuation levels, good cash flow from operations and expanding profit margins.
The team believes its strengths outweigh the fact that the company has had sub par growth in net income.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: FLO
