Why Hostess Brands Stock Popped 10% This Morning

Hostess is plumb full of earnings goodness.

Rich Smith
Rich Smith
Feb 28, 2019 at 1:39PM
Consumer Goods

What happened

Shares of born-again-from-bankruptcy Twinkie maker Hostess Brands (NASDAQ:TWNK) 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 Brands earnings call transcript.


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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.