Hostess stock has gained more than 30% in the past 12 months
Hostess Brands, Inc. (NASDAQ:TWNK) is one of the largest packaged food companies focused on developing, manufacturing, marketing, selling, and distributing fresh baked sweet goods in the United States. TWNK has increased 31% year-over-year and has added more than 40% since bottoming at a record low of $10.87 last April. Since the end of March, support has emerged at the 100-day moving average, containing pullbacks. However, shares of Hostess Brands stock are down 11% from its nearly four-year high of $16.18.
From a fundamental analysis perspective, Hostess has maintained a decent revenue growth rate. In fiscal 2020, Hostess increased its top line by 12% or roughly $109 million. TWNK's total revenues currently sit around the $1 billion mark, which is about 30% higher than what they generated in 2017. However, Hostess has struggled to maintain that same level of growth on the bottom line. Since fiscal 2018, TWNK has only grown its net income by 3% and is down a massive 70%, or about $160 million, since fiscal 2017. In addition, Hostess stock trades at a relatively high price-earnings ratio of 28.53 and its balance sheet also carries $1.14 billion in debt compared to just $173 million in cash.
It is difficult to picture Hostess products falling out of favor with the products' strong and loyal consumer base. Hostess maintains a strong hold of their market share, but the key for this company will be in reducing its costs of business. The best thing Hostess stock has going for it at the moment is its existing revenue growth and a forward price-earnings ratio of 16.81.