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Why Hostess Brands Stock Popped 10% This Morning

By Rich Smith – Updated Apr 21, 2019 at 9:29PM

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Hostess is plumb full of earnings goodness.

What happened

Shares of born-again-from-bankruptcy Twinkie maker Hostess Brands (TWNK 0.73%) are looking hot out of the oven today, up 8.1% as of 1:10 p.m. EST after the company reported Q4 earnings that easily surpassed analyst estimates.

Expected to earn $0.15 pro forma on sales of just under $211 million in its fiscal fourth quarter, Hostess instead earned $0.17 pro forma on sales of $214.8 million.

Plate full of Twinkies.

Hostess is plumb full of earnings goodness. Image source: Getty Images.

So what

GAAP profits weren't quite as good as those pro forma numbers, of course. After benefiting mightily from tax reform last year, with $1.74 per share in GAAP profits, Hostess earnings plummeted 93% to land at just $0.12 per share in Q4. Still, as I said -- this was better than expected. And Hostess's sales growth of 9.5% was likewise more than Wall Street was looking for.

Hostess further noted that it gained market share in sweet baked goods, now at 17.4%. All in all, management called it a "solid finish to the year."

Check out the latest Hostess Brandsearnings call transcript.

Now what

As for the new year, Hostess is guiding investors to expect "continued revenue growth well above the Sweet Baked Goods ("SBG") category in 2019," although management wouldn't put a number to the promise.

For what it's worth, Wall Street analysts think Hostess will finish up 2019 with sales of $876.4 million and earnings of $0.64 per share, presumably pro forma.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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