The food industry has always been a cornerstone of economic stability, but in recent years, it has evolved into a dynamic sector offering significant growth opportunities. Food companies are innovating with bold flavors and healthier options that capture consumer attention and drive sales.
Given the industry’s tailwinds, investors could consider investing in fundamentally strong food maker stocks Cal-Maine Foods, Inc. (CALM), Flowers Foods, Inc. (FLO), and Ingredion Incorporated (INGR) for potential gain and growth.
The rising global population has increased the demand for packaged and processed foods. As per the Business Research company reports, the packaged food market is projected to reach $3.31 trillion. The hectic lifestyle of the working population around the globe also drives this shift.
Innovation in flavors and product categories also plays a pivotal role in this sector. The food companies are introducing bold, global-inspired flavors and unique product lines with the help of technological advancements. AI and machine learning algorithms analyze vast amounts of data on consumer preferences, ingredient interactions, and flavor compounds. These insights help predict successful flavor combinations and create new, unique taste profiles.
According to Statista, revenue in the food market for the United States is projected to reach $864 billion in 2025 and grow at a CAGR of 4.1% until 2029.
Now, let’s take a closer look at the fundamentals of the three featured Food Makers stocks, beginning with the third choice.
Stock #3: Cal-Maine Foods, Inc. (CALM)
CALM is engaged in the production, grading, packaging, marketing, and distribution of shell eggs and egg products under the brand names of Egg-Land's Best, Land O' Lakes, Farmhouse Eggs, Sunups, Sunny Meadow, and 4-Grain.
On October 7, 2024, CALM announced its Board’s approval of $40 million in capital projects to expand its cage-free production capabilities. The funding will come from cash reserves, investment securities, and operating cash flow.
The stock’s trailing-12-month net income margin of 20.39% is 375% higher than the industry average of 4.29%. Similarly, its 34.26% trailing-12-month ROCE is 215.9% above the industry average of 10.84%. Also, its trailing-12-month asset turnover ratio of 1.38x compares favorably to the industry average of 0.87x.
In the fiscal second quarter that ended on November 30, 2024, CALM’s net sales increased 82.5% year-over-year and amounted to $954.67 million. The company reported an operating income of $278.06 million, indicating considerable growth from the prior-year quarter, while its gross profit grew 290.7% from the prior-year quarter to $356.04 million. Its attributable net income came in at $219.06 million and $4.47 per share, up significantly and 1177.1% year-over-year, respectively.
Street expects CALM’s revenue for the fiscal third quarter (ending February 2025) to increase 35.7% year-over-year to $953.76 billion. Its EPS for the same period is expected to register a 95.3% growth from the prior year, settling at $5.86. In addition, it surpassed the revenue estimates in three of the trailing four quarters, which is promising.
CALM shares have surged 94.9% over the past year and 76.9% over the past nine months to close the last trading session at $107.
CALM’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
CALM has an A grade for Quality and a B for Growth. It is ranked #22 out of the 75 stocks in the B-rated Food Makers industry. Click here to see the additional ratings for CALM (Value, Momentum, Stability, and Sentiment).
Stock #2: Flowers Foods, Inc. (FLO)
FLO is a producer and marketer of packaged bakery foods in the United States. Its products include bread, buns, rolls, snack items, bagels, English muffins, and tortillas and are sold under a variety of brand names, including Nature's Own, Dave's Killer Bread (DKB), Wonder, Canyon Bakehouse, Tastykake, and Mrs. Freshley's.
On January 8, FLO agreed to acquire Simple Mills, a market-leading natural brand offering premium better-for-you crackers, cookies, snack bars, and baking mixes, for $795 million in cash. This acquisition will enhance FLO’s better-for-you snacking platform along with the company's growth and margin prospects.
In terms of the trailing-12-month gross profit margin, FLO’s 49.3% is 37.8% higher than the 35.78% industry average. Similarly, its 7.02% trailing-12-month ROTA is 781.2% higher than the industry average of 3.87%. Also, its trailing-12-month ROCE of 17.31% compares to the industry average of 10.84%.
During the fiscal third quarter, which ended on October 31, 2024, FLO’s net sales amounted to $1.19 billion. The company posted an adjusted EBITDA of $133.31 million, indicating 10% growth from the prior year’s quarter with an adjusted EBITDA margin of 11.2% (up 110 bps year-over-year). FLO’s adjusted net income stood at $69.33 million, up 12.4% year-over-year, while its adjusted net income per share grew 13.8% from the year-ago value to $0.33.
Analysts expect FLO’s revenue for the fourth quarter (ended December 2024) to increase marginally year-over-year to $1.13 billion, while its EPS for the same quarter is expected to grow 4.8% from the prior year to $0.21.
The stock has gained marginally intraday to close the last trading session at $19.15.
FLO’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It also has a B grade for Value and Quality. Within the same B-rated industry, it is ranked #11 out of 75 stocks. Click here to see FLO’s ratings for Growth, Momentum, Stability, and Sentiment.
Stock #1: Ingredion Incorporated (INGR)
INGR is a leading provider of ingredient solutions for food, beverage, and industrial applications that manufactures and sells sweeteners, starches, nutrition ingredients, and biomaterial solutions derived from wet milling and processing corn and other starch-based materials to a range of industries internationally.
On November 14, INGR announced a new long-term collaboration with Lantmännen, an agricultural cooperative and Northern Europe’s leading player in agriculture, bioenergy, food, and ingredients, to accelerate the development of high-quality plant-based proteins in the European market. This strategic partnership will help INGR to expand its global footprint in the European market.
INGR's trailing-12-month ROCE and ROTA of 18.68% and 9.08% are 72.2% and 134.4% higher than their respective industry averages of 10.84% and 3.87%. Likewise, its trailing-12-month levered FCF margin of 13.22% is 130.1% above the industry average of 5.75%.
For the third quarter that ended on September 30, INGR’s net sales amounted to $1.87 billion. It posted a gross profit of $479 million, indicating a 13.8% increase from the prior-year quarter.
The company’s non-GAAP operating income grew 28.8% from the year-ago value to $282 million. In addition, INGR’s attributable non-GAAP net income came in at $203 million, up 30.1% year-over-year, while its non-GAAP earnings per share rose 30.9% from the year-ago value to $3.05.
The consensus revenue estimate of $1.96 billion for the fiscal first quarter (ending March 2025) represents a 4.2% increase year-over-year. The consensus EPS estimate of $2.59 for the same quarter indicates a 24.6% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has surged 19.9%, closing the last trading session at $131.82.
INGR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
INGR has a B grade for Value, Sentiment, and Quality. It is ranked first in the Food Makers industry. Click here to see the additional ratings for INGR (Growth, Momentum, and Stability).
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INGR shares were trading at $131.88 per share on Tuesday afternoon, up $0.06 (+0.05%). Year-to-date, INGR has declined -3.57%, versus a -1.12% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
