On Friday, Flowers Foods Inc. (NYSE:FLO) shares advanced 4.20% after announcing its most recent quarterly results. The company reported its fiscal third-quarter revenue and earnings Thursday after markets closed, beating the consensus for analyst expectations.
Flowers Foods posted FQ3 non-GAAP earnings per share of $0.30, beating the average analyst estimate of $0.25. On the other hand, its GAAP EPS of $0.18 missed the consensus for the Street forecast of $0.22, while revenue for the quarter increased by 4.1% from the same quarter a year ago to $1.03 billion, $20 million ahead of analyst expectations.
Is it too risky to buy Flowers Foods shares?
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From an investment perspective, Flowers Foods shares trade at reasonable trailing 12-month and forward P/E ratios of 25.52 and 22.04, respectively. Therefore, the stock could be an interesting option for value investors.
On the other hand, analysts expect its earnings per share to decline by 7.60% this year, before falling at an average annual rate of 1.22% over the next five years. Therefore, growth investors could opt for alternatives in the market.
Although Flowers Foods shares have spiked more than 15% since the 20th of September, the stock is up just 16.52% this year, thus leaving room for more upward movements.
Technically, Flowers Foods shares seem to have recently spiked to complete an upward breakout from an ascending channel formation. As a result, the stock has moved deep into overbought conditions, creating a perfect opportunity for a pullback.
Therefore, given the underwhelming earnings growth prospects, investors could target potential pullback profits at about $26.16, or lower at $25.48, while $27.31 and $27.98 are resistance levels.
Time for profit-takers to swoop in?
In summary, although Flowers Foods shares seem to be trading at reasonable valuation multiples, the stock has recently spiked to enter overbought conditions, thus creating an opportunity for a pullback.
Therefore, now could be the time to take some profits.
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