Flowers Foods (FLO) Showing Signs Of A Dead Cat Bounce Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Flowers Foods ( FLO) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Flowers Foods as such a stock due to the following factors:

  • FLO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.7 million.
  • FLO has traded 403,873 shares today.
  • FLO is up 3.1% today.
  • FLO was down 6.2% yesterday.

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More details on FLO:

Flowers Foods, Inc. produces and markets bakery products in the United States. It operates through two segments, Direct-Store-Delivery (DSD) and Warehouse Delivery. The DSD segment produces and markets fresh bakery foods, including fresh breads, buns, rolls, tortillas, and snack cakes. The stock currently has a dividend yield of 2.3%. FLO has a PE ratio of 28. Currently there are 3 analysts that rate Flowers Foods a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Flowers Foods has been 851,400 shares per day over the past 30 days. Flowers has a market cap of $4.8 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 1.04 and a short float of 3.3% with 5.68 days to cover. Shares are up 12.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Flowers Foods as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.9%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 86.61% to $93.73 million when compared to the same quarter last year. In addition, FLOWERS FOODS INC has also vastly surpassed the industry average cash flow growth rate of 31.10%.
  • 48.28% is the gross profit margin for FLOWERS FOODS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 3.19% trails the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.69, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.85 is somewhat weak and could be cause for future problems.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

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