Earnings Preview: Hormel Foods - Analyst Blog
August 22 2011 - 7:37AM
Zacks
Hormel Foods Corp.
(HRL) will be reporting its third-quarter 2011 earnings on
Thursday, August 25, 2011.
The current Zacks Consensus
Estimate for earnings per share (EPS) is 36 cents, representing an
annualized growth of 12.70%.
Over the last four quarters, HRL
outperformed the Zacks Consensus Estimate three times and matched
once. The average earnings surprise was 15.77%.
Second Quarter 2011
Highlights
On May 26, Hormel Foods Corporation
posted strong results for the second quarter of fiscal 2011 with an
EPS of $0.40, compared with $0.34 in the corresponding period of
fiscal 2010. The result was in line with the Zacks Consensus
Estimate of $0.40.
Net income reached $109.6 million,
up from $91.3 million in the second quarter of 2010. The increase
was driven by revenue growth coupled with cost containment.
Net revenues were $1,959.0 million,
up 15.3% from $1,699.8 million in the corresponding period of the
previous year and $1,816 million as per the Zacks Consensus
Estimate. Revenue increased in all segments of the company.
Agreement of Estimate
Revisions
In the last 30 days, none of the
analysts increased or decreased the company’s earnings per share
(EPS) estimates for the third quarter, while one analyst enhanced
an estimate for the next quarter. For fiscal 2011, one analyst
increased his/her estimate, and one followed a similar trend for
fiscal 2012. No analysts decreased their estimates for fiscal 2011
or 2012.
The positive views of the analysts
are based primarily on the portfolio of product mix and the rise in
prices of its value added products.
Magnitude of Estimate
Revisions
Estimates over the last 30 days
remained static at 36 cents per share for the third quarter of
2011, representing year-over-year growth of 12.70%.
Estimates for fiscal 2011 also
remained static at $1.72 over the last 30 days, while fiscal 2012
marginally increased from $1.79 to $1.80. These estimates
represented year-over-year growth of 14.07% and 4.21% for 2011 and
2012, respectively.
Our Take
Hormel is likely to post
encouraging results in the third quarter based on the company’s
continued acquisitions/ integration, supported by financial
flexibility. Moreover, the company’s product value addition, retail
penetration, brand building and promotional activities are expected
to ensure future expansion
Based in Austin, Minnesota, Hormel
Foods Corporation is a leading manufacturer and marketer of various
meat and food products in the United States and internationally.
The company faces stiff competition from ConAgra Foods
Inc. (CAG), Kraft Foods Inc. (KFT), and
Tyson Foods Inc. (TSN).
We currently maintain a long-term
Neutral recommendation on the stock. Hormel has a Zacks #2 Rank,
which translates into a short-term Buy rating (1-3 months).
CONAGRA FOODS (CAG): Free Stock Analysis Report
HORMEL FOODS CP (HRL): Free Stock Analysis Report
KRAFT FOODS INC (KFT): Free Stock Analysis Report
TYSON FOODS A (TSN): Free Stock Analysis Report
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