Does Flowers Foods’ Recent 3% Price Jump Signal a New Trend for 2025?

If you have been watching Flowers Foods lately, you are not alone. Investors trying to size up their next move with this stock have a tricky decision on their hands. In the short run, Flowers Foods saw its price pop 3.1% over the past week, offering a glimmer of optimism. However, zooming out presents a different picture, with the stock down more than 36% for the year to date and nearly 38% over a whole year. While long-term holders may wince at that drawdown, others might be wondering if there is a hidden opportunity coming into focus.

The company recently earned a strong valuation score of 4 out of 6, indicating it is undervalued in several key respects even as broader market headwinds have weighed on shares. It can be easy to get caught up in the red numbers, but sharp price drops often prompt a fresh look at the real value underneath, especially in light of shifting consumer trends and competitive pressures in the food sector.

So, how exactly does Flowers Foods stack up by the usual valuation yardsticks and what does that score really tell us? Let’s break down each approach, then consider one way to look at value that even seasoned investors sometimes overlook.

Why Flowers Foods is lagging behind its peers

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

The Discounted Cash Flow (DCF) model evaluates a company's value by estimating its future cash flows and discounting them back to today's dollars. This gives investors a sense of what the business is fundamentally worth based on its expected financial performance rather than market sentiment.

For Flowers Foods, the current Free Cash Flow is $371.88 million. Analysts provide forecasts for cash flow over the coming five years, and projections beyond that are extrapolated based on recent trends. Over the next decade, cash flow is expected to gradually decline. Projected Free Cash Flow in 2027 is $242 million. By 2035, using Simply Wall St's extended projections, Free Cash Flow could be around $228 million. All forecasts are presented in US dollars.

According to this DCF approach, the estimated intrinsic value of Flowers Foods shares is $23.37. This is significantly above the current market price, with the methodology implying the stock is trading at a 43.7% discount to its fair value.

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 43.7%. 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 classic valuation tool for profitable businesses like Flowers Foods. Since it measures how much investors are willing to pay for each dollar of net earnings, the PE ratio is especially meaningful for established companies with steady profits. Growth prospects and perceived risk play a key role in what counts as a "normal" PE. Higher expected growth tends to drive up the fair PE, while extra risks or volatility push it lower.

Currently, Flowers Foods trades at a PE ratio of 12.7x. That sits well below the Food industry average of about 18x and also trails its key listed peers, which average 20.6x. On these numbers alone, the stock looks inexpensive relative to the broader sector and its rivals. But a deeper lens comes from considering more than just raw comparables.

Simply Wall St calculates a “Fair Ratio” for Flowers Foods at 12.1x. This proprietary score takes into account many more factors than industry or peer averages, such as the company’s earnings growth outlook, margin profile, size, and risk exposure. Because it blends fundamentals, sector context, and market cap, the Fair Ratio provides a more nuanced perspective on what is truly appropriate for Flowers Foods, not just what is “normal” for everyone else.

With Flowers Foods’ current PE sitting almost exactly at the Fair Ratio, the market seems to be pricing this stock about right for its risk and growth profile at the moment.

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 that there is an even better way to understand valuation, so let’s introduce you to Narratives, a smarter, more dynamic approach that lets you connect the story you believe about Flowers Foods to financial forecasts and fair value.

Narratives go beyond raw numbers, allowing you to create and share your own outlook for a company. You can lay out your reasoning behind revenue estimates, profit margins, and the fair price you think shares deserve, all in one place. Narratives make it simple to express whether, for example, you think low-carb trends will keep dragging on Flowers Foods' core business, or if you believe new product innovation can strengthen margins and drive growth.

What makes Narratives powerful is that they link your story about the business directly to a fair value estimate, helping you decide how your fair value compares to the current share price. Narratives on Simply Wall St are refreshed with the latest news and earnings, so your story stays up to date without extra effort. This feature is easily accessible on Simply Wall St's Community page, where millions of investors share perspectives and track how new information shifts their views.

For example, some investors following recent industry pressures and analyst models see a fair value around $12.0 per share, while others, more optimistic about premium product growth and cost savings, set targets closer to $20.0. Narratives bring these views together visually so you can see where you fit, and ultimately, make better decisions, faster.

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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