Morningstar - Hostess Brands Inc. Class A (TWNK) With 1Q Results On Track at Hostess, Our Outlook Remains Intact; Shares Attractive

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Morningstar

Zain Akbari, CFA

With 1Q Results On Track at Hostess, Our Outlook Remains Intact; Shares Attractive

Our $15.50 per share valuation for narrow-moat Hostess should not change materially after the company started the year on pace to meet our full-year targets. We believe the shares are attractive, with sentiment underestimating Hostess' ability to fend off category headwinds using its strong brands. Our forecast assumes low-single-digit top-line growth and high-20s adjusted EBITDA margins on average over the next decade.
Management reaffirmed guidance ($0.65-$0.70 adjusted diluted EPS, $220 milli...

09/05/2018 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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With 1Q Results On Track at Hostess, Our Outlook Remains Intact; 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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