We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Hormel Foods (HRL) Q2 Earnings Top Estimates on Solid Pricing
Read MoreHide Full Article
Hormel Foods Corporation (HRL - Free Report) posted robust second-quarter fiscal 2022 results, wherein the top and bottom lines increased year over year and beat the Zacks Consensus Estimate. This marked the sixth consecutive quarter of solid sales and the third straight quarter of earnings growth.
Hormel Foods benefited from its balanced business model, robust brands and an efficient management team. The operating margin improved during the quarter due to HRL’s efforts to counter inflation. Additionally, the company gained from its efforts to enhance the supply chain. Brand strength, particularly in Columbus, WHOLLY, Applegate, Hormel Gatherings, SPAM and Planters to name a few, and higher pricing aided results.
During the fiscal second quarter, Hormel Foods concluded the integration of all the aspects of the Planters snack nuts business, which continues to perform at the top end of the company’s expectations. Management expects a solid finish from the business in the balance of the year. The company also remains optimistic about the momentum of the Corn Nuts brand, which is witnessing solid sales.
The company is also making advancement in its transformation actions in the Jennie-O Turkey Store segment. Hormel Foods closed the Benson Avenue production facility in the second quarter of fiscal 2022 and transferred nearly 200 workers to its newer and bigger manufacturing facility in Willmar, MN. HRL intends to integrate business functions, consolidate the Jennie-O Turkey Store supply chain into the broader Hormel Foods One Supply Chain and generate SG&A cost synergies in the range of nearly $20-$30 million by fiscal 2023.
Quarter in Detail
Earnings of 48 cents per share came ahead of the Zacks Consensus Estimate of 46 cents. The metric increased 14% from the year-ago quarter’s reported figure.
Hormel Foods Corporation Price, Consensus and EPS Surprise
Net sales in the quarter were $3,096.6 million, surpassing the Zacks Consensus Estimate of $3,029 million. The top line increased 19% year over year, while organic net sales were up 10%. Net sales increased across most segments. Volumes were 1.2 billion lbs, down 2% year over year. Organic volumes fell 8%.
Channel-wise, net sales across U.S. Retail and U.S. Foodservice moved up 15% and 32% year over year, respectively, while International sales fell 3% in the quarter. Demand remained high in U.S. channels and the company gained from its pricing efforts to counter inflation along with gains from the Planters snacks nuts business.
SG&A expenses rose to $224.7 million from around the $200 million reported in the year-ago quarter. The operating income came in at nearly $335 million, up 16%.
Image Source: Zacks Investment Research
Segment Details
Net sales in the Grocery Products unit increased 39%, while organic net sales were up 7% year over year. Volumes were up 19%, while the organic volume was up 2%. Net sales and volumes were driven by the inclusion of the Planters snack nuts business and overall portfolio strength. Organic sales were backed by solid pricing and strength in brands like SPAM, Dinty, Moore, Wholly and Skippy. The segmental profit declined 9%.
Net sales in the Jennie-O Turkey Store segment rallied 16%, while volumes dipped 1%. Sales increased due to growth in all business areas, led by foodservice, whole bird and retail sales. The segmental profit surged a whopping 387% on elevated commodity prices and foodservice sales.
Net sales in the Refrigerated Foods unit rose 13% year over year. Organic net sales in the segment increased 11%. Volumes decreased 13% and organic volumes tumbled 14%. Net sales were backed by an improved foodservice business, gains from pricing actions, contributions from the Planters® snack nuts business and strength in Columbus grab-and-go charcuterie, Applegate natural and organic meats, Hormel Square Table refrigerated entrees and Hormel Gatherings party trays. Volumes were hurt by reduced commodity sales stemming from the company's new pork supply deal. The segmental profit moved up 3%.
International & Other net sales slid 1%, while organic net sales declined 3%. Volumes were down 14%, while organic volumes fell 15%. Sales and volumes were hurt by export logistics challenges and reduced commodity sales stemming from the company's new pork supply deal. The segmental profit fell 3%.
Financial Details
Hormel Foods ended the quarter with cash and cash equivalents of $861.7 million. The long-term debt less current maturities came in at $3,294.1 million. In the six months ended May 1, 2022, Hormel Foods generated cash of $577.1 million from operating activities. This currently Zacks Rank #3 (Hold) player expects to incur capital expenditures of $310 million in fiscal 2022.
Guidance
Given its first-half performance and current anticipation for the full year, management reiterated its net sales guidance for fiscal 2022 while narrowing its bottom-line range. Hormel Foods remains confident about delivering the targeted net sales growth due to the strong demand for its brands in all three channels, supply-chain enhancements, pricing actions and investments in capacities.
Coming to the bottom line, management expects a strong show from its Refrigerated Foods segment. It anticipates the Grocery Products segment to benefit from pricing actions in the fourth quarter. That said, management is assessing the impacts of HPAI on the Jennie-O Turkey Store segment supply chain along with exploring other external factors impacting the International & Other segment, such as export logistics hurdles and pandemic-led lockdowns in China.
HRL projects fiscal 2022 net sales in the range of $11.7-$12.5 billion. Earnings per share (EPS) are now envisioned in the range of $1.87-$1.97 compared with the previous band of $1.87-$2.03.
Shares of Hormel Foods have declined 5.8% in the past three months compared with the industry’s drop of 3.1%.
The Zacks Consensus Estimate for Sysco’s current financial-year sales and EPS suggests growth of 32.6% and 124.2%, respectively, from the year-ago reported number. SYY has a trailing four-quarter earnings surprise of 9.1%, on average.
Medifast, which manufactures and distributes weight loss, weight management, healthy living products and other consumable health and nutritional products, currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Medifast’s current financial-year sales and EPS suggests growth of nearly 19% and 11.5%, respectively, from the year-ago reported figure. MED has a trailing four-quarter earnings surprise of 12.9%, on average.
The Chef’s Warehouse, which engages in the distribution of specialty food products, currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current financial-year sales suggests growth of 29.4% from the year-ago reported figure. CHEF has a trailing four-quarter earnings surprise of 372.3%, on average.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Hormel Foods (HRL) Q2 Earnings Top Estimates on Solid Pricing
Hormel Foods Corporation (HRL - Free Report) posted robust second-quarter fiscal 2022 results, wherein the top and bottom lines increased year over year and beat the Zacks Consensus Estimate. This marked the sixth consecutive quarter of solid sales and the third straight quarter of earnings growth.
Hormel Foods benefited from its balanced business model, robust brands and an efficient management team. The operating margin improved during the quarter due to HRL’s efforts to counter inflation. Additionally, the company gained from its efforts to enhance the supply chain. Brand strength, particularly in Columbus, WHOLLY, Applegate, Hormel Gatherings, SPAM and Planters to name a few, and higher pricing aided results.
During the fiscal second quarter, Hormel Foods concluded the integration of all the aspects of the Planters snack nuts business, which continues to perform at the top end of the company’s expectations. Management expects a solid finish from the business in the balance of the year. The company also remains optimistic about the momentum of the Corn Nuts brand, which is witnessing solid sales.
The company is also making advancement in its transformation actions in the Jennie-O Turkey Store segment. Hormel Foods closed the Benson Avenue production facility in the second quarter of fiscal 2022 and transferred nearly 200 workers to its newer and bigger manufacturing facility in Willmar, MN. HRL intends to integrate business functions, consolidate the Jennie-O Turkey Store supply chain into the broader Hormel Foods One Supply Chain and generate SG&A cost synergies in the range of nearly $20-$30 million by fiscal 2023.
Quarter in Detail
Earnings of 48 cents per share came ahead of the Zacks Consensus Estimate of 46 cents. The metric increased 14% from the year-ago quarter’s reported figure.
Hormel Foods Corporation Price, Consensus and EPS Surprise
Hormel Foods Corporation price-consensus-eps-surprise-chart | Hormel Foods Corporation Quote
Net sales in the quarter were $3,096.6 million, surpassing the Zacks Consensus Estimate of $3,029 million. The top line increased 19% year over year, while organic net sales were up 10%. Net sales increased across most segments. Volumes were 1.2 billion lbs, down 2% year over year. Organic volumes fell 8%.
Channel-wise, net sales across U.S. Retail and U.S. Foodservice moved up 15% and 32% year over year, respectively, while International sales fell 3% in the quarter. Demand remained high in U.S. channels and the company gained from its pricing efforts to counter inflation along with gains from the Planters snacks nuts business.
SG&A expenses rose to $224.7 million from around the $200 million reported in the year-ago quarter. The operating income came in at nearly $335 million, up 16%.
Image Source: Zacks Investment Research
Segment Details
Net sales in the Grocery Products unit increased 39%, while organic net sales were up 7% year over year. Volumes were up 19%, while the organic volume was up 2%. Net sales and volumes were driven by the inclusion of the Planters snack nuts business and overall portfolio strength. Organic sales were backed by solid pricing and strength in brands like SPAM, Dinty, Moore, Wholly and Skippy. The segmental profit declined 9%.
Net sales in the Jennie-O Turkey Store segment rallied 16%, while volumes dipped 1%. Sales increased due to growth in all business areas, led by foodservice, whole bird and retail sales. The segmental profit surged a whopping 387% on elevated commodity prices and foodservice sales.
Net sales in the Refrigerated Foods unit rose 13% year over year. Organic net sales in the segment increased 11%. Volumes decreased 13% and organic volumes tumbled 14%. Net sales were backed by an improved foodservice business, gains from pricing actions, contributions from the Planters® snack nuts business and strength in Columbus grab-and-go charcuterie, Applegate natural and organic meats, Hormel Square Table refrigerated entrees and Hormel Gatherings party trays. Volumes were hurt by reduced commodity sales stemming from the company's new pork supply deal. The segmental profit moved up 3%.
International & Other net sales slid 1%, while organic net sales declined 3%. Volumes were down 14%, while organic volumes fell 15%. Sales and volumes were hurt by export logistics challenges and reduced commodity sales stemming from the company's new pork supply deal. The segmental profit fell 3%.
Financial Details
Hormel Foods ended the quarter with cash and cash equivalents of $861.7 million. The long-term debt less current maturities came in at $3,294.1 million. In the six months ended May 1, 2022, Hormel Foods generated cash of $577.1 million from operating activities. This currently Zacks Rank #3 (Hold) player expects to incur capital expenditures of $310 million in fiscal 2022.
Guidance
Given its first-half performance and current anticipation for the full year, management reiterated its net sales guidance for fiscal 2022 while narrowing its bottom-line range. Hormel Foods remains confident about delivering the targeted net sales growth due to the strong demand for its brands in all three channels, supply-chain enhancements, pricing actions and investments in capacities.
Coming to the bottom line, management expects a strong show from its Refrigerated Foods segment. It anticipates the Grocery Products segment to benefit from pricing actions in the fourth quarter. That said, management is assessing the impacts of HPAI on the Jennie-O Turkey Store segment supply chain along with exploring other external factors impacting the International & Other segment, such as export logistics hurdles and pandemic-led lockdowns in China.
HRL projects fiscal 2022 net sales in the range of $11.7-$12.5 billion. Earnings per share (EPS) are now envisioned in the range of $1.87-$1.97 compared with the previous band of $1.87-$2.03.
Shares of Hormel Foods have declined 5.8% in the past three months compared with the industry’s drop of 3.1%.
Looking for Consumer Staple Stocks? Check These
Some better-ranked stocks are Sysco Corporation (SYY - Free Report) , Medifast (MED - Free Report) and The Chef’s Warehouse (CHEF - Free Report) .
Sysco, which engages in the marketing and distribution of various food and related products, sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Sysco’s current financial-year sales and EPS suggests growth of 32.6% and 124.2%, respectively, from the year-ago reported number. SYY has a trailing four-quarter earnings surprise of 9.1%, on average.
Medifast, which manufactures and distributes weight loss, weight management, healthy living products and other consumable health and nutritional products, currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Medifast’s current financial-year sales and EPS suggests growth of nearly 19% and 11.5%, respectively, from the year-ago reported figure. MED has a trailing four-quarter earnings surprise of 12.9%, on average.
The Chef’s Warehouse, which engages in the distribution of specialty food products, currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current financial-year sales suggests growth of 29.4% from the year-ago reported figure. CHEF has a trailing four-quarter earnings surprise of 372.3%, on average.