Morningstar - Hostess Brands Inc. Class A (TWNK) Despite Short-term Challenges, Our Outlook Is Intact for Hostess; Shares Attractive

Report

Morningstar

Zain Akbari, CFA

EUR 101.80 For Business Accounts Only

Despite Short-term Challenges, Our Outlook Is Intact for Hostess; Shares Attractive

We do not plan to make a large change to our $15.30 per share valuation for narrow-moat Hostess after it reported somewhat soft third-quarter earnings. We attribute the shortfall to transitory factors such as hurricanes and an associated uptick in freight costs, the cadence of new product introductions, and temporary disruptions with a co-manufacturer. We do not anticipate significantly altering our long-term forecast of low-single-digit top-line growth and mid-20s adjusted operating margins, on...

08/11/2017 15 EN

Underlying

Hostess Brands Inc. Class A

Hostess Brands is a packaged food company. The company produces Hostess?, Dolly Madison?, Cloverhill? and Big Texas? products at bakeries located in Emporia, KS; Columbus, GA; Indianapolis, IN; and Chicago, IL. In-store bakery products are produced at bakeries located in Southbridge, MA. The company has invested in baking and packaging technology, including installing two Auto-bake systems and fully-automated packaging systems. A portion of the company's products are co-manufactured and packaged under its brands and sold through its distribution facilities. The company's Direct-to-Warehouse distribution model uses centralized distribution centers and common carriers to fill orders, with products.

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US44109J1060 NASDAQ Stock Market United States

Provider

Morningstar

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.

Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.

We have operations in 27 countries.

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Analysts

Zain Akbari, CFA

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Despite Short-term Challenges, Our Outlook Is Intact for Hostess; Shares Attractive

Hostess Brands to Be Acquired by the J.M. Smucker Co. for Approximately $5.6 Billion

Vermilion Short Shots: Technically Vulnerable Stocks

Vermilion Compass: Weekly Equity Strategy

Business as Usual for No-Moat Lonza; Specialty Ingredients Carve-Out on Track for 2020

Astra Posts Solid 2Q, Driven by Strong Cancer Drug Sales and Moving Away From One-Time Divestments

Astra Posts Solid 2Q, Driven by Strong Cancer Drug Sales and Moving Away From One-Time Divestments

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