Earnings Preview: Hormel Foods - Analyst Blog
May 21 2012 - 4:30AM
Zacks
Hormel Foods Corp.
(HRL) will be reporting its second-quarter 2012 earnings on
Wednesday, May 23, 2012.
The current Zacks Consensus
Estimate for earnings per share is 42 cents, representing an
annualized growth of 3.86%.
With respect to earnings surprises
over the trailing four quarters, HRL outperformed the Zacks
Consensus Estimate in two quarters and was in line in the
rest. Average earnings surprise was 2.62%, implying that the
company outperformed the Zacks Consensus Estimate by the same
magnitude over the last four quarters.
First Quarter 2012
Highlights
On February 23, Hormel
Foods Corporation posted its financial results for the
first quarter of 2012 with earnings per share of 48 cents, down 13%
compared with 55 cents in the prior-year period and in line with
the Zacks Consensus Estimate.
Net earnings reached $128.4
million, down 14% from $148.8 million reported in the first quarter
of 2011.
Net sale were $2,039.4 million, up
6.1% y/y, but slightly missing the Zacks Consensus Estimate of
$2,047 million. The year-over-year increase was driven by four of
the company’s five segments registering sales gain in the quarter.
International business also contributed to growth, fueled by strong
export sales.
Agreement of Estimate
Revisions
In the last 30 days, one analyst
decreased the company’s earnings per share estimates for the second
quarter of 2012. However, none increased the same as there was no
catalyst for such change. For fiscal 2012, none of the analysts
increased or decreased their estimate, and followed a similar trend
for fiscal 2013.
Magnitude of Estimate
Revisions
Estimates over the last 30 days
remained static at 42 cents per share for the second quarter of
2012.
Estimate for fiscal 2012 remained
static at $1.82 over the last 30 days while that for fiscal 2013
showed a similar trend at $1.95. These estimates represented a
year-over-year growth of 4.50% and 7.00% for 2012 and 2013,
respectively.
Our Take
Hormel is likely to post
encouraging results in the second quarter of 2012 based on the
rising prices of its value-added food products. The company’s
portfolio of product mix alongside its persistent strategies of
retail penetration, brand building and promotional efforts appear
impressive.
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 #3 Rank,
which translates into a short-term (1-3 months) ‘Hold’ rating.
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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