Assessing Flowers Foods Stock After a 39% Slide and Recent Cost Pressures

If Flowers Foods stock is sitting in your portfolio, or you are debating whether now is the time to scoop up shares, you are probably searching for some clarity. After all, the company’s share price hasn’t exactly been a beacon of optimism lately. Down nearly 39.1% over the last year and sliding about 37.5% year-to-date, Flowers Foods hasn’t caught a break for quite a while. Even looking back over three and five years, you are still staring at declines of almost 49% and 34% respectively. The mood around the stock might seem as chilly as yesterday’s bread, but there’s more to this story than raw numbers.

Recent news points to Flowers Foods facing ongoing cost pressures from ingredients and transportation, as well as shifting consumer buying habits in the packaged bread aisle. While not all headlines have shaken the market, these factors have contributed to the market’s cautious re-pricing of risk. Yet the stock has quietly edged up 0.8% in the last week and is roughly flat over the past month, hinting that some investors think the selling could be overdone and a turnaround might be taking shape.

So is Flowers Foods truly a bargain hiding in plain sight, or are investors right to stay on the sidelines? Our valuation snapshot is a helpful starting point. On a scale where a company gets a point for each undervalued category out of six, Flowers pulls in a value score of 4. But we are just getting started. Next up, I will walk you through each major valuation lens, before revealing what might be the most useful way to judge whether Flowers Foods is a buy right now.

Why Flowers Foods is lagging behind its peers

Approach 1: Flowers Foods Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s value by projecting its future cash flows and discounting them back to today’s dollars. This provides a sense of what the business is worth compared to its current share price. For Flowers Foods, the model uses the 2 Stage Free Cash Flow to Equity approach, focusing on cash generated for shareholders after covering business costs and investments.

Currently, Flowers Foods reports last twelve months’ Free Cash Flow of $371.9 million. After factoring in expected changes, analysts see Free Cash Flow reaching $271.5 million in 2026 and $242 million by year-end 2027. Projections beyond five years are extrapolated, with FCF in 2035 estimated near $228.5 million, based on modest negative and then stabilizing growth.

Once all forecasted cash flows are discounted to their present value, the DCF model calculates Flowers Foods’ intrinsic value at $23.37 per share. With the market implying a 45.0% discount based on recent prices, the analysis indicates the stock is meaningfully undervalued.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Flowers Foods.

Our Discounted Cash Flow (DCF) analysis suggests Flowers Foods is undervalued by 45.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Flowers Foods Price vs Earnings

The Price-to-Earnings (PE) ratio is a popular way to value profitable companies because it relates a company’s share price to its earnings, offering a clear sense of how much investors are willing to pay for each dollar of profit. It is especially relevant for steady businesses like Flowers Foods that generate consistent earnings, making it easier to compare across similar companies and industries.

Interpreting a "normal" or "fair" PE ratio is both an art and a science. Higher growth expectations or lower risk typically justify paying a higher PE, while slower growth, lower profitability, or greater risk should result in a lower PE. For context, Flowers Foods trades at 12.4x earnings, well below the Food industry average of 18.6x and its peer group average of 19.5x. This discount can look attractive, but raw comparisons often miss nuances in growth rates and risk profiles.

This is where the Simply Wall St Fair Ratio comes in. This proprietary metric fine-tunes the expected PE by factoring in not just industry and size but also Flowers Foods’ growth potential, profit margins, and risk. Using this approach, the fair PE ratio for Flowers is 12.0x. Since the current PE and fair PE are nearly identical, with less than a tenth of a point between them, the market appears to be pricing Flowers Foods about right at today’s levels.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Flowers Foods Narrative

Earlier we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is the story you believe about a company, combining your assumptions about things like future revenue, earnings, and profit margins, to explain why you think a particular fair value makes sense. Rather than just comparing ratios, using Narratives connects the dots from the company’s strategy and market changes to a financial forecast and finally to a calculated fair value, making it easier to understand the “why” behind the numbers.

Narratives are an intuitive, easy-to-use feature available on the Simply Wall St Community page, where millions of investors share, compare, and update their perspectives. They help you decide when to buy or sell by showing how your fair value estimate stacks up against the latest stock price. Best of all, your Narrative updates automatically as new company news or earnings are released, so your view is always based on the freshest information.

For example, for Flowers Foods, some investors have a cautious Narrative with a fair value as low as $12, based on concerns about profit margin pressure and slow revenue growth, while others have a more optimistic view, estimating fair value as high as $20 by factoring in new acquisitions and innovation. Narratives put you in the driver’s seat so you can make sense of the numbers, stay informed, and invest on your terms.

Do you think there's more to the story for Flowers Foods? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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