Earnings Preview: Hormel Foods - Analyst Blog
August 17 2012 - 5:15AM
Zacks
Hormel Foods Corp.
(HRL) is set to report its third-quarter 2012 results on Thursday,
May 23, 2012.
The current Zacks Consensus
Estimate is pegged at 41 cents, representing an annualized growth
of 12.5%.
With respect to earnings surprises,
HRL has outperformed the Zacks Consensus Estimate in three of the
last four quarters and was in line in the other. Average
earnings surprise stood at 7.44%, implying that the company has
surpassed the Zacks Consensus Estimate by the same magnitude over
the last four quarters.
Second Quarter 2012
Highlights
On May 23, Hormel Foods Corporation
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
earnings per share in the prior-year period.
Net earnings came in at $127.9
million compared with $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 but slightly
lower than the Zacks Consensus Estimate of $2,035 million. The
year-over-year increase was driven by the sales gain across four of
the company’s five segments. Export sales across international
business also contributed to growth.
Agreement of Estimate
Revisions
In the last 30 days, none of the
analysts increased or decreased the company’s earnings per share
estimates for the third quarter of 2012, given the lack of
catalysts. Also, for 2012, none of the analysts increased or
decreased their estimate, and followed a similar trend for
2013.
Magnitude of Estimate
Revisions
Estimates over the last 30 days
increased slightly from 40 cents to 41 cents per share for the
third quarter of 2012.
Estimate for 2012 remained static
at $1.85 over the last 30 days while that for 2013 showed a similar
trend and stood at $1.95. These estimates represented a
year-over-year growth of 6.45% and 5.48% for 2012 and 2013,
respectively.
Our Take
We expect positive sales momentum
and rise in EPS for the third quarter of 2012. Weare optimistic on
the company’s continuously improving operational efficiencies and
pricing strategy, which has been positioning Hormel above its
peers.
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 #4 Rank,
which translates into a short-term (1-3 months) ‘Sell’ 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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