Flowers Foods Shares Sink After SunTrust Downgrade, Earnings Miss

Shares of Flowers Foods Inc. , the makers of baked goods like Wonder and Nature's Own bread, Tastykake snacks and Mi Casa tortillas, are down 20% in premarket trading after the stock was downgraded to neutral at SunTrust Robinson Humphrey. Analysts cited fourth-quarter earnings that missed estimates and pending litigation. Flowers said on Wednesday that adjusted net income decreased 20% to 16 cents per share from 20 cents per share for the year earlier period, below the FactSet consensus of 21 cents per share. Sales for the quarter decreased 2.2% to $858.4 million from $877.3 million in the year earlier period, below the FactSet estimate of $904 million. SunTrust analysts are also concerned that pending litigation will keep away new investors, it said in a Thursday note. Flowers is being sued by truck drivers in more than 12 states who say they were improperly classified as independent contractors, in violation of the federal Fair Labor Standards Act, The Wall Street Journal reported Jan. 29. Flowers shares are down 15.3% for the last 12 months while the S&P is down 11.5%.