Morningstar - Hostess Brands Inc. Class A (TWNK) Narrow-Moat Hostess Faces Inflationary Pressures, but Brand Strength Is Intact; Shares Attractive

Report

Morningstar

Zain Akbari

EUR 100.00 For Business Accounts Only

Narrow-Moat Hostess Faces Inflationary Pressures, but Brand Strength Is Intact; Shares Attractive

We expect to make a low-to-mid single-digit cut to our $14.10 per share valuation for narrow-moat Hostess after it posted lackluster third-quarter earnings. Most of the change will stem from alternations to our short-term outlook, particularly as recent price increases to offset inflation are only just hitting retail and will take time to boost profitability. We believe the causes of Hostess' soft quarter are transitory (price lags, the ongoing turnaround of its newly-acquired breakfast assets) ...

08/11/2018 14 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

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Narrow-Moat Hostess Faces Inflationary Pressures, but Brand Strength Is 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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