Flowers Foods Reports Slight 4Q EPS Miss, Deutsche Bank Maintains Hold

Deutsche Bank has published a research report on Flowers Foods, Inc.

after the company reported 4Q EPS slightly below analyst estimates. In the report, Deutsche Bank writes "Flowers reported opr. 4Q10 EPS of $0.34 vs. our $0.38 est and consensus of $0.39. There were no one-time items in this quarter. Sales decline -0.6% vs. our +6% est based on +2.0% price/mix, -2.2% volume, +0.3% acquisitions, -0.7% VIE deconsolidation. COGS (excl. D&A) came in at 51.9% of sales vs. our 53.3% est. and 52.9% in the year ago period. SM&A was up 110 bps to 36.7% vs. 35.6% last year and our 34.5% forecast due to higher workforce related cost. EBIT was $45.8 mil. vs. our $54 mil est, down 2.8% vs. last year. EBIT margins were 8.0% vs. our 8.8% forecast. DSD sales were -2.6% vs. our +5-6% est, due to +2.1% price/mix, -0.8% VIE decons, -3.9% vol. Profits were +2.6% on 9.6% margins. Warehouse sales were +7.9% vs. our +9% est incl. +4.6% price/ mix, +1.9% volume, +1.4% acq. Profits were -14.8% with margins of 9.1%. Versus our model: interest income was in line, corp exp. limited EPS $0.01, a lower tax rate helped EPS $0.01, shares were in line. Flowers lowered 2011 EPS growth to +5-10% from the previous +8-13%. Mgmt. kept sales guidance of +3-6% unchanged. It appears continued competitive market conditions combined with rising cost are limiting Flowers' profits." Deutsche Bank maintains its Hold rating and $26 price target. Flowers Foods closed yesterday at $25.65.