Hostess Brands Tops Expectations in Q1; Shares Fall

Hostess Brands Inc (TWNK) beat earnings and revenue estimates in the first quarter. However, shares were down 1.6% on May 17 to close at $15.46. Hostess Brands is a packaged food company that manufactures and distributes snack products in the United States.

The company reported net revenues of $265.4 million which increased 9% from the year-ago period. Analysts were expecting revenues of $256.7 million. The increase in revenue was mainly driven by strength in the company’s Hostess and Voortman products.

Meanwhile, earnings per share came in at $0.20 per share, up 42.9% year-over-year. Consensus estimates for adjusted earnings were pegged at $0.19 per share.

Hostess Brands CEO Andy Callahan said, “We continue to experience elevated at-home consumption, while at the same time, increased on-the-go snacking and consumer mobility are benefiting our profitable single-serve mix. Continued strong execution on productivity and pricing measures gives us the confidence to manage inflation and leaves us optimistic for the remainder of 2021.” (See Hostess Brands stock analysis on TipRanks)

For 2021, the company expects adjusted net revenue growth to be in the range of 3.0% to 4.5%. Adjusted EPS is projected to land between $0.80 and $0.85, reflecting a 6.7% to 13.3% increase year-over-year.

Following the Q1 earnings release, Jefferies analyst Robert Dickerson maintained the stock’s price target of $18 (16.5% upside potential) and a Buy rating.    

Dickerson commented, “With ~9% organic sales growth on top of the ~6% year-ago compare, ongoing share gains, improved shelf space, c-store traffic momentum, healthy cash positioning, and an attractive EV/EBITDA, all while mgmt. points to manageable cost inflation for the year, we continue to recommend the shares.”

Consensus among analysts is a Strong Buy based on 3 Buys and 1 hold. The average analyst price target stands at $17.75 and implies upside potential of 14.9% to current levels. Shares have gained 27.2% over the past year.

TipRanks data shows that financial blogger opinions are 100% Bullish on TWNK, compared to a sector average of 70%.

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