Flowers Foods, Inc. (FLO) recently delivered a better-than-estimated performance for the third quarter on the back of market share gains and a steady recovery in the non-retail business.
FLO provides packaged bakery products under a range of brands including Nature’s Own, Dave’s Killer Bread, Wonder, Canyon Bakehouse, and Tastykake.
Additionally, FLO also upped its guidance for 2021 and raised its quarterly dividend by 5% to $0.21 per share. With these positives in mind, let us take a look at the changes in FLO’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, FLO’s top two risk categories are Production and Ability to Sell, contributing 33% and 24% to the total 21 risks identified, respectively. In its recent quarterly report, the company has changed three key risk factors.
The first two of these risks fall under the Production risk category. FLO highlighted that it operates an independent distributorship model. Any disruption in the distribution system or a negative change in its relationship with independent distributor partners could be detrimental to FLO’s financial condition and cash flows.
Secondly, the job market has seen varying trends amid the COVID-19 pandemic, and FLO has seen labor shortages at some of its bakeries. A shortage of manpower, employee turnover, or increase in employee and related costs could negatively impact the company.
Under the Macro & Political risk category, FLO noted that in the current COVID-19 pandemic, restrictive measures have impacted its business and may further impact its operations, workforce, and consumers. These events and factors heighten uncertainty for the company and could adversely affect its business and financials. (See Insiders’ Hot Stocks on TipRanks)
Compared to a sector average of 17%, FLO’s Production risk factor is at 33%.
Wall Street’s Take
Last week, Jefferies analyst Robert Dickinson reiterated a Hold rating on the stock alongside a price target of $28 (6% upside potential).
Consensus on the Street is a Hold based on 4 unanimous Holds. The average Flowers Foods price target of $27.75 implies 5.1% upside potential for the stock. FLO’s shares have gained 19% over the past year.
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