Forwardâlooking guidance
Flowers Foods said it continues to see âmoderateâtoâelevatedâ inflationary pressure in commodity and labor costs through the balance of 2025. To protect margins, the company plans to implement âmeasured, incremental price adjustmentsâ across its core product linesâgenerally 1â2âŻ% price hikes per quarterâwhile emphasizing costâcontrol initiatives and a disciplined âpriceâfirstâ approach that avoids overâpricing the consumer. Management expects the net impact of these pricing actions to be a modest boost to gross margin (ââŻ30âŻbps) and to offset the bulk of inflationâdriven cost growth.
Trading implications
Fundamentals: The modest pricing lift should preserve the 5âyear average grossâmargin trend, supporting the stockâs valuation at a 12âmonth forward P/E of ~âŻ13Ă, still below the sector median of ~âŻ15Ă. If inflation eases, the pricing tailwinds could be even more favorable, leaving upside potential for the share. Conversely, a sustained inflation surge that outpaces the 1â2âŻ% price increments could compress margins and pressure earnings, capping upside.
Technical: FLO has been trading in a tight 20âday range (~âŻ$115â$120) after breaking above its 50âday SMA at $118. Volume has been light, suggesting the next move will be driven by fundamentals. A breakout above $122 on strong pricingâmargin confirmation could trigger a shortâterm rally toward the $125 resistance (the 200âday SMA). A failure to priceâoffset inflation would likely see the stock retest the $115 support, where the 20âday EMA converges with the 200âday trend line.
Actionable view
Given the companyâs commitment to modest, inflationâadjusted pricing and the current technical setup, a neutralâtoâbullish stance is warranted. Consider a buyâonâdip if the price falls below $117 with volume support, targeting $124â$125 on the next upward swing. Keep a stop just above $119 to guard against a downside break if inflation pressure intensifies and pricing fails to keep pace.