Flowers Foods (FLO)

Packaged bakery food company Flower Foods (NYSE:FLO) met Wall Streets revenue expectations in Q3 CY2025, with sales up 3% year on year to $1.23 billion. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $5.28 billion at the midpoint. Its non-GAAP profit of $0.23 per share was in line with analysts’ consensus estimates.

Company Overview

With Wonder Bread as its premier brand, Flower Foods (NYSE:FLO) is a packaged foods company that focuses on bakery products such as breads, buns, and cakes.

The perishable food industry is diverse, encompassing large-scale producers and distributors to specialty and artisanal brands. These companies sell produce, dairy products, meats, and baked goods and have become integral to serving modern American consumers who prioritize freshness, quality, and nutritional value. Investing in perishable food stocks presents both opportunities and challenges. While the perishable nature of products can introduce risks related to supply chain management and shelf life, it also creates a constant demand driven by the necessity for fresh food. Companies that can efficiently manage inventory, distribution, and quality control are well-positioned to thrive in this competitive market. Navigating the perishable food industry requires adherence to strict food safety standards, regulations, and labeling requirements.

Competitors in packaged bakery goods include Grupo Bimbo (BMV:BIMBO A), Hostess Brands, acquired by J.M. Smucker (NYSE:SJM), and Pepperidge Farm, a subsidiary of Campbell Soup (NYSE:CPB).

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years.

With $5.13 billion in revenue over the past 12 months, Flowers Foods carries some recognizable products but is a mid-sized consumer staples company. Its size could bring disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale.

As you can see below, Flowers Foods’s sales grew at a sluggish 2.9% compounded annual growth rate over the last three years as consumers bought less of its products. We’ll explore what this means in the "Volume Growth" section.

This quarter, Flowers Foods grew its revenue by 3% year on year, and its $1.23 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 3.3% over the next 12 months, similar to its three-year rate. This projection is underwhelming and suggests its newer products will not accelerate its top-line performance yet.

Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.

Flowers Foods’s average quarterly sales volumes have shrunk by 1.9% over the last two years. This decrease isn’t ideal because the quantity demanded for consumer staples products is typically stable.

In Flowers Foods’s Q3 2025, year on year sales volumes were flat. This result was a well-appreciated turnaround from its historical levels, showing the company is heading in the right direction.

All else equal, we prefer higher gross margins because they usually indicate that a company sells more differentiated products, has a stronger brand, and commands pricing power.

Flowers Foods has great unit economics for a consumer staples company, giving it ample room to invest in areas such as marketing and talent to grow its brand. As you can see below, it averaged an excellent 49.1% gross margin over the last two years. That means Flowers Foods only paid its suppliers $50.87 for every $100 in revenue.

In Q3, Flowers Foods produced a 47.9% gross profit margin, marking a 1.8 percentage point decrease from 49.8% in the same quarter last year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Flowers Foods’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 6.8% over the last two years. This profitability was mediocre for a consumer staples business and caused by its suboptimal cost structure.

Looking at the trend in its profitability, Flowers Foods’s operating margin might fluctuated slightly but has generally stayed the same over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Flowers Foods generated an operating margin profit margin of 5.4%, down 2.6 percentage points year on year. Since Flowers Foods’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, and administrative overhead increased.

We track the change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

In Q3, Flowers Foods reported adjusted EPS of $0.23, down from $0.33 in the same quarter last year. This print slightly missed analysts’ estimates. Over the next 12 months, Wall Street expects Flowers Foods’s full-year EPS of $1.10 to shrink by 3.8%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Flowers Foods has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 5.7% over the last two years, slightly better than the broader consumer staples sector.

Taking a step back, we can see that Flowers Foods’s margin expanded by 1.3 percentage points over the last year. This shows the company is heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability was flat.

Flowers Foods’s free cash flow clocked in at $30.42 million in Q3, equivalent to a 2.5% margin. The company’s cash profitability regressed as it was 5 percentage points lower than in the same quarter last year. This warrants extra attention because consumer staples companies typically produce more consistent and defensive performance.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Flowers Foods historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 9.1%, somewhat low compared to the best consumer staples companies that consistently pump out 20%+.

Flowers Foods reported $16.73 million of cash and $1.78 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $520.1 million of EBITDA over the last 12 months, we view Flowers Foods’s 3.4× net-debt-to-EBITDA ratio as safe. We also see its $18.96 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Flowers Foods provide full-year revenue guidance that met analysts’ expectations. On the other hand, its EBITDA missed and its EPS was in line with Wall Street’s estimates. Overall, this quarter was mixed. The stock traded up 3% to $11.99 immediately after reporting.

Updated: December 4, 2025 at 9:48 PM EST

Before deciding whether to buy Flowers Foods or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

Flowers Foods doesn’t pass our quality test. First off, its revenue growth was uninspiring over the last three years, and analysts don’t see anything changing over the next 12 months. And while its gross margins are a strong starting point for the overall profitability of the business, the downside is its declining EPS over the last three years makes it a less attractive asset to the public markets. On top of that, its projected EPS for the next year is lacking.

Flowers Foods’s P/E ratio based on the next 12 months is 11.2x. This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $12.71 on the company (compared to the current share price of $10.68).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.