TWNK Joins the S&P SmallCap 600 and Rallies to New Highs

TWNK reached a high of $21.21 yesterday

Jan 28, 2022 at 11:58 AM
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Hostess Brands, Inc. (NASDAQ:TWNK) made a few headlines recently. It was just announced that the stock will be added to the S&P SmallCap 600 Index (SPCY) effective Tuesday, Feb 1. Additionally, the firm set a date for its virtual Investor Day on Tuesday, March 1. TWNK will also report its fourth-quarter earnings before the open on the same day.

The security hit a record high of $21.21 during yesterday's session, adding 6.7%, which marked its biggest single-session jump in nearly a year. The stock is cooling from yesterday's surge, last seen down 0.9% at $20.33, though it still sports a year-over-year 42.5% lead. Several short-term moving averages could step in as solid support, including the stock's 20-day moving average, which is helping to contain today's pullback, as well as the 10-day moving average -- a former ceiling that TWNK toppled during yesterday's trading. 

twnk jan 28

Short sellers have been hitting the exits in droves, which could have helped contribute to the recent surge. Short interest dropped 49.9% in the last two reporting periods, and now makes up just a slim 1.7% of the stock's available float. 

Moreover, Hostess Brands’ trailing 12-month revenues have increased 8% since fiscal 2020 and are up 29.5% since fiscal 2018. In addition, TWNK is estimated to grow revenues and earnings 5.1% and 9.3%, respectively, in 2022. A major red flag, though, is that Hostess Brands' trailing 12-month net income has decreased 36% since fiscal 2020.

Furthermore, Hostess Brands holds a fairly weak balance sheet with $228 million in cash and $1.12 billion in total debt. Hostess stock's valuation is also relatively high with TWNK trading at a price-earnings ratio of 21.19 and a price-sales ratio of 2.39, ultimately making Hostess stock fairly overvalued.


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