FLO
Flowers Foods, Inc.
$7.94
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Undervalued
Trading 46.6% below fair value
You pay
$7.94
Bear
$12.24
Fair
$14.87
Bull
$17.49
Bear
$12.24
+54.2%
$0.97 × 14x P/E
Fair
$14.87
+87.2%
$0.97 × 17x P/E
Bull
$17.49
+120.3%
$0.97 × 20x P/E
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
8.2x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $10.00 from 20 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $14.87 per share.
Warnings
The company's reported profits differ from official accounting profits by 142%. Check what costs are being left out of the adjusted number.
The company pays out 217% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Dividend-based valuation: $12.52 (below our primary estimate by 24%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $10.00 (from 20 analysts). Our estimate is 65% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples