Hormel Beats, Retains Guidance - Analyst Blog
May 23 2012 - 4:45AM
Zacks
Hormel Foods Corporation
(HRL) posted second-quarter 2012
financial results with earnings per share of 48 cents, surpassing
the Zacks Consensus Estimate of 42 cents. The quarter’s earnings
also spiked 20% from 40 cents per share reported in the prior-year
period.
Net earnings reached $127.9
million, up from $109.6 million in the second quarter of
2011.
Net sales for the second
quarter of 2012 were $2,012.9 million, up 2.7% year over year,
slightly missing the Zacks Consensus Estimate of $2,035 million.
The year-over-year increase was driven by the sales gain among four
of the company’s five segments. Export sales across international
business also contributed to growth.
During the reported quarter,
revenue from Grocery Products inched up 1.4% year over year and
Jennie-O Turkey Store witnessed revenue improvement of 6.9%.
However, the Refrigerated Foods segment ended the quarter with a
decline of 0.8% in revenue year over year based on lower pork
operating margins. On the other hand, Specialty Foods registered a
rise of 11.7% and revenue from all other items surged 11.1% during
the reported quarter.
Operating profit for Grocery
Products for the reported quarter increased 9.8% while Refrigerated
Foods registered a decline of 24.5% year over year. Operating
profit for Jennie-O Turkey Store jumped 50.3%, led by increased
retail value-added sales. Specialty Foods surged 8.8% year over
year.
Gross profit, for the second
quarter of 2012, was recorded at $335.6 million, up from $326.2
million reported in the year-ago comparable quarter. Selling,
general and administrative (SG&A) expenses were down 7.1% year
over year, reaching $148.7 million in the reported
quarter.
Exiting the second quarter,
net cash provided by operating activities was recorded at $213.0
million compared with $275.9 million at the end of the year-ago
comparable quarter. At the end of the reported quarter, the company
recorded cash and cash equivalents of $524.8 million, down from
$913.7 million at the end of the previous year comparable quarter.
The long-term debt (less current maturities) stood at $250 million
at the end of 2Q12.
Outlook:
Hormel maintains
full-year earnings guidance range of $1.79 to $1.89 per share,
anticipating positive sales momentum from branded stores resulting
from new advertising campaigns. Management also holds a positive
outlook toward improving results from Refrigerated Foods segment
with pork operating margins returning to normalized
levels.
The company paid its
335th consecutive quarterly dividend, at an annual rate
of 60 cents, effective May 15, 2012. Also, it has recently declared
quarterly dividend of 15 cents per
share on the company’s common stock. The dividend will be paid on
August 15, 2012 to stockholders of record as of the close of
business on July 23, 2012.
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
#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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