Flowers Foods, the maker Wonder Bread and other baked goods, reported second-quarter earnings on Thursday that beat expectations, helped by price increases, and the company bumped up its profit outlook.
Flowers is one of several leading food price influencers to report during the week, as investors try to gauge the response of consumers to inflated food prices.
The company reports following a spike in wheat prices after Russia's invasion of Ukraine. Both nations last month reached an agreement to allow Ukraine to resume grain shipments, after Russia blockaded Ukraine's ports, allowing wheat prices to drift lower. U.S. consumer prices, more broadly, eased in July.
Flowers Foods Earnings
Flowers Foods earned 31 cents per share, better than FactSet forecasts for 27 cents per share.
Sales rose 11% to $1.13 billion, above estimates for $1.12 billion. Flowers Foods attributed the sales gains to higher prices, put in place to offset higher costs. Costs for packaging and ingredients rose. Volumes, however, were weaker.
The company raised its full-year per-share profit outlook to a range of $1.25 to $1.30, from $1.20 to $1.30. That forecast was above Wall Street's estimates for $1.24.
Flowers Foods said it expected sales of between $4.764 billion to $4.850 billion over that time. The midpoint was above analysts' expectations for $4.771 billion.
Flowers Foods stock rose 0.8% to 27.80 after-hours on the stock market today.
Along with Wonder Bread, Flowers Foods makes rolls, snack cakes and tortillas under brands like Nature's Own, Tastykake and Dave's Killer Bread.
When the company reported first-quarter earnings in May, it said higher prices helped drive most of its sales gains at that point as well. Flowers raised prices on its products in January and in June.
During the company's first-quarter earnings call, CEO Ryals McMullian said that "commodity prices have risen meaningfully higher than our original expectations due to a variety of factors, not the least of which is the conflict in Ukraine."
"Although virtually none of our raw materials originate in Ukraine, the current events there do impact the world market for wheat and other commodities," he continued.
Flower Foods stock is below a handle buy point at 28.77. But a reversal off its 21-day exponential moving average and above a downward trendline in the handle could generate an early entry around 28.
Higher Food Prices, Demand
Food prices have risen partly due to the invasion of Ukraine, which through sanctions or the fighting itself as upended trade flow for oil, gas and grains. Harsher climates have squeezed farmers' output. Higher gasoline and natural gas costs have driven higher fertilizer and feed costs. Insufficient staffing at processing plants has forced employee wages higher.
Businesses have to some degree passed those costs, along with costs related to persistent supply-chain snags, on to customers. The Biden administration has, at times, accused the meat industry of price-gouging.
Meat producer Tyson Foods brooked a series of analyst price target cuts after reporting results Monday. Mixed fiscal third-quarter results included below-forecast operating earnings and lower volume guidance, although its revenue outlook remained steady. Sysco, which provides food to restaurants and other areas of the food-service industry, also received a pair of price target cuts following its quarterly report on Tuesday. Both stocks are down sharply for the week.
Tyson Foods said its own food price increases helped boost sales. But it noted weaker demand for high-end cuts of beef, and said high pork prices in stores had hit global demand.
"Volumes were down both for the third quarter and year-to-date due to supply constraints and a challenging macroeconomic environment impacting consumer demand," Tyson CFO Stewart Glendinning said
Egg producer Cal-Maine, which has seen egg prices rise due to an avian flu outbreak, reported in July. Its volatile shares are in a cup-with-handle base with a 57.85 buy point.
