Flower Foods Shares Wilt Following Q2 Results, Guidance Cut

Shares of Flowers Foods, Inc. (NYSE: FLO) plunged as much as 10 percent and touched a new 52-week low of $14.51 after the company reported lower-than-expected revenue for the second quarter and cut its FY16 outlook.

Flower Foods reported second quarter EPS of $0.26 and revenues of $935 million. Analyst consensus had an EPS estimate of $0.26 and revenues of $950 million.

Flower Foods now sees FY16 EPS at $0.90 - $0.95, down from prior guidance of $1.00-$1.06 and revenue forecast to $3.93-$3.98 billion from $3.986-$4.08 billion. The company attributed the guidance revision to increased competitive activity and weak category volumes.

The company also announced Project Centennial, a company-wide strategic review in conjunction with Accenture, which is aimed to improve top line, efficiency, competitive positioning, and margins.

"The category appears to have become even more competitive, with particular pressure in the key soft variety segment. We believe Project Centennial could drive long-term improvement but details are limited.

Meanwhile, investors are increasingly concerned with IO litigation and DOL risk," Deutsche Bank analyst Mario Contreras wrote in a note.

Contreras has a Hold rating and $19 price target on the stock, which is down 10 percent to $14.44.