Flowers Foods, Inc. FLO has taken a significant step forward in its strategic growth journey by entering into a definitive agreement to acquire Simple Mills for $795 million in cash. This acquisition represents a transformative move for Flowers Foods, delivering substantial benefits across its business operations and financial profile. Financed through a $795 million term loan from the Royal Bank of Canada, the deal is anticipated to close in the first quarter of 2025, subject to regulatory approvals.

The company’s strategic priorities, ranging from brand innovation and operational efficiency to targeted acquisitions, pave the way to growth. The addition of Simple Mills is set to spur growth and diversify Flowers Foods' revenue base, reinforcing its position in the better-for-you and snacking categories.

Simple Mills, a premium brand offering better-for-you crackers, cookies, snack bars and baking mixes, brings substantial growth opportunities to Flowers Foods. The brand’s innovative use of nutrient-dense ingredients and its ability to resonate with health-conscious consumers have fueled its strong market performance, significantly outpacing category growth. With Simple Mills’ strong presence in more than 30,000 natural and conventional stores nationwide, Flowers Foods gains access to a broader consumer demographic.

Simple Mills’ products, which are outpacing overall category growth, offer Flowers Foods a chance to capture a larger share of this attractive market. The acquisition is expected to immediately contribute to Flowers Foods' net sales adjusted EBITDA growth and margins, while also aiding its earnings per share by 2026. On a proforma basis, the transaction positions Flowers Foods for long-term financial success, supporting top-line growth and improved profitability.

What’s More for FLO?

Acquisitions are a key pillar of Flowers Foods' growth strategy, enabling expansion of its brand portfolio, geographic reach and product offerings. The company focuses on investments aligned with its strategic priorities to strengthen core categories and explore emerging markets. Notable acquisitions include Papa Pita Bakery in 2023, Dave’s Killer Bread (DKB) and Alpine Valley Bread Company in 2015, and Canyon Bakehouse in 2018. DKB, a top-performing brand, achieved $1 billion in retail sales in 2023, while Canyon Bakehouse has propelled Flowers into the gluten-free bakery space. The company’s Nature’s Own brand also continues to perform well.

Innovation has been a cornerstone of Flowers Foods' strategy. The launch of keto-friendly products, including Nature’s Own keto bread, has resonated with consumers, driving significant share gains in the sub-category. Building on this momentum, the company plans to introduce keto hamburgers and hotdog buns in 2024 and 2025. The forthcoming national rollout of Wonder-branded sweet baked goods and DKB snack bites reflects a keen focus on high-growth adjacent categories like indulgent treats and better-for-you snacks.

Despite all the positives, Flowers Foods continues to navigate a challenging consumer environment marked by shifts in spending behavior and heightened promotional activity, which have negatively impacted the company's performance in the third quarter of 2024. While the broader food industry has benefited from a consumer shift toward at-home consumption, Flowers Foods faces headwinds specific to its core categories, including fresh packaged bread and cake.

This Zacks Rank #3 (Hold) company’s shares have lost 10.4% in the past three months compared with the industry’s decline of 9.4%.

FLO Stock Past Three Month Performance

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Stocks to Consider

Freshpet Inc. FRPT manufactures, distributes and markets natural fresh meals and treats for dogs and cats. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 27.2% and 228.6%, respectively, from the prior-year reported levels. FRPT delivered a trailing four-quarter earnings surprise of 144.5%, on average.

United Natural Foods, Inc. UNFI distributes natural, organic, specialty, produce and conventional grocery and non-food products. It presently flaunts a Zacks Rank #1. UNFI delivered an earnings surprise of 553.1% in the last reported quarter.

The Zacks Consensus Estimate for United Natural Foods’ current fiscal-year sales and earnings indicates growth of 0.3% and 442.9%, respectively, from the prior-year reported levels.

Tyson Foods, Inc. TSN operates as a food company worldwide. It operates through four segments, Beef, Pork, Chicken and Prepared Foods. It currently sports a Zacks Rank #1. TSN delivered a trailing four-quarter average earnings surprise of 57%.
 
The consensus estimate for Tyson Foods’ current fiscal-year sales and earnings indicates growth of 2% and 13.2%, respectively, from the prior-year reported levels.

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