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Factors to Note Before Flowers Foods' (FLO) Q1 Earnings

Flowers Foods, Inc. FLO is likely to register top-line growth when it reports first-quarter fiscal 2023 earnings on May 18. The Zacks Consensus Estimate for revenues is pegged at $1,566 million, suggesting an increase of 9.1% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for the bottom line has remained unchanged in the past 30 days at 36 cents per share. The projection indicates a decline of 18.2% from the year-ago quarter’s earnings.

Flowers Foods has a trailing four-quarter earnings surprise of 9.4%, on average. The packaged bakery food product company’s earnings came in line with the consensus mark in the last reported quarter.

We expect first-quarter revenues to increase 9.6% to $1,573.2 million while anticipating the bottom line to decline 19.6% to 35 cents.

Flowers Foods, Inc. Price, Consensus and EPS Surprise

Flowers Foods, Inc. price-consensus-eps-surprise-chart | Flowers Foods, Inc. Quote

Factors to Consider

Flowers Foods has been benefiting from its core priorities, which include developing its team, concentrating on brands, prioritizing margins and looking out for prudent mergers and acquisitions. To this end, management has been shifting its focus toward becoming a more brand-focused company. FLO has been undertaking innovation in its leading brands, which has been aiding growth.  

Talking of acquisitions, the company acquired Papa Pita Bakery in February 2023, which is likely to contribute to first-quarter results. For fiscal 2023, the company expects sales in the range of $5.176-$5.242 billion, suggesting a rise of 7.7-9.1% year over year. This also bodes well for the quarter under review.

However, Flowers Foods is battling major hurdles due to cost inflation and supply-chain bottlenecks. On its fourth-quarter earnings call, Flowers Foods stated that it expects inflation to be high but is likely to decline in 2023. Along with flour, the company is seeing increased cost pressure across nearly all the categories of ingredients, natural gas and packaging. It also expects the possibilities of a recession during the year.

FLO expects costs related to upgrading its ERP system to peak in 2023, which is likely to affect the adjusted EBITDA by nearly 9 cents. Additionally, management expects a rise in depreciation and amortization in 2023 compared with the 2023 level. These factors raise concerns for the bottom line.

However, Flowers Foods has been benefiting from its pricing efforts. Impressive pricing and portfolio strategies, along with enhanced efficiencies, have been helping the company counter various inflationary and supply-chain headwinds.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Flowers Foods this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is not the case here.

Flowers Foods has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Target Corporation TGT currently has an Earnings ESP of +0.40% and a Zacks Rank #3. The company’s bottom line is expected to decline year over year when it reports first-quarter fiscal 2023 results. The Zacks Consensus Estimate for the quarterly EPS is pegged at $1.75. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $25.4 billion, which suggests a rise of 0.8% from the figure reported in the prior-year quarter. TGT delivered an earnings beat of nearly 36% in the last reported quarter.

Deckers Outdoor Corporation DECK currently has an Earnings ESP of +7.36% and a Zacks Rank of 3. DECK is likely to register a top-line decline when it reports fourth-quarter fiscal 2023 results. The Zacks Consensus Estimate for revenues is pegged at $703.6 million, suggesting a dip of 4.4% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for Deckers’ quarterly earnings has increased from $2.54 per share to $2.60 in the past 30 days. The consensus estimate indicates growth of 3.6% from the figure reported in the prior-year quarter. DECK has a trailing four-quarter earnings surprise of nearly 31%, on average.

lululemon athletica LULU currently has an Earnings ESP of +1.97% and a Zacks Rank of 3. LULU is expected to register a top-line and bottom-line improvement when it reports first-quarter fiscal 2023 numbers.

The Zacks Consensus Estimate for lululemon’s quarterly revenues is pegged at $1.9 billion, calling for growth of 19.5% from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for the quarterly EPS of $1.93 suggests growth of 30.4% from the figure reported in the year-ago fiscal quarter. LULU has a trailing four-quarter earnings surprise of 6.8%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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