Inflation: Hostess Brands CEO sees no end in sight to price pressures

Brian Sozzi · Executive Editor
2 min read

Hostess Brands (TWNK) CEO Andy Callahan isn't certain that inflation has hit its breaking point on his company, at least for now.

"I am not in a position to call the peak," Callahan said on Yahoo Finance Live (video above). "I thought we may be able to have said that last year. When we started the year, we thought inflation would be up double digits. We have now revised that forecast to be more in the high teens. We are seeing it across a broad basket. We have seen it in our commodities like wheat and other things we cover. We are seeing it in our fuel costs and transportation. We are seeing it in packaging. So it's difficult for me to see the peak now."

A box of Hostess Brands "Twinkies" is on display at a Jewel-Osco grocery store in Chicago. REUTERS/Jim Young · (Jim Young / reuters)

The company is looking at increasing prices again this year to help offset the impact of inflation.

Here is how Hostess Brands performed compared to Wall Street estimates:

  • Net Sales: $332.1 million vs. $296.3 million

  • Adjusted Operating Profits: $77.4 million vs. $69.7 million

  • Diluted EPS: $0.27 vs. $0.23

Hostess now sees full-year net sales growth of at least 12%, up from a prior range of 5% to 8%. The company reaffirmed its adjusted earnings outlook of $0.93 to $0.98.

Shares of Hostess Brands fell 3% during Thursday's session, though the Street generally viewed the performance and outlook favorably.

"Hostess posted a strong 1Q22 fueled by demonstrable consumption momentum across its sweet baked goods and cookies portfolio, year over year pricing, and favorable mix," Deutsche Bank analyst Steve Powers said.

Despite the one-day selling pressure, the stock has been wrapped up into a buying binge amongst investors for safe-haven consumer staples amid increased stock market volatility. Shares are hovering around an all-time high, and have gained 10% on the year versus a 13% drop for the S&P 500.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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