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) Q3 Earnings Lag Estimates, Revenues Up Y/Y
Read MoreHide Full Article
Hormel Foods Corporation (HRL - Free Report) posted third-quarter fiscal 2022 results, wherein the top and bottom lines increased year over year. However, both the metrics fell short of the Zacks Consensus Estimate. While management raised its sales view for fiscal 2022, it lowered its earnings per share guidance. Shares of the company dipped 6.6% on Sep 1.
Hormel Foods recently unveiled a new operating model to better align its business structure and make it more easygoing, market-driven and consumer and customer-focused. The company’s new strategic model, which will take effect from Oct 31, 2022 (fiscal 2023 beginning), will include three operating units – Retail, Foodservice and International.
Quarter in Detail
Hormel Foods’ earnings of 40 cents per share came a penny lower than the Zacks Consensus Estimate. However, the metric increased from the year-ago quarter’s adjusted earnings of 39 cents per share.
Net sales in the quarter were $3,034.4 million compared to the Zacks Consensus Estimate of $3,070 million. The top line increased 6% year over year, while organic net sales were up 3%. Volumes were 1.1 million lbs, down 11.1% year over year.
Hormel Foods Corporation Price, Consensus and EPS Surprise
Channel-wise, net sales across U.S. Retail and U.S. Foodservice moved up 4% and 14% year over year, respectively, while International sales fell 13% 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. International sales were down due to soft export sales.
SG&A expenses declined to $222.1 million from the $226.3 million reported in the year-ago quarter. The operating income came in at $291 million, up 17% from the adjusted operating income of $248 million in the year-ago period. The operating margin of 9.6% increased from the adjusted operating margin of 8.7% in the same period last year.
Segment Details
Net sales in the Grocery Products unit increased 25%, while organic net sales were up 13% year over year. Volumes were up 15%, while the organic volume was up 8%. Net sales and volumes were driven by the inclusion of the Planters snack nuts business along with the sturdy demand for nut butters, Mexican and simple meals. Organic sales were backed by solid pricing and strength in products like SKIPPY spreads, WHOLLY Guacamole and Hormel chili, to name a few. The segmental profit declined 5% due to cost inflation and reduced results from MegaMex.
Net sales in the Jennie-O Turkey Store segment tumbled 8%, while volumes slumped 20%. Sales were hurt by the adverse supply impacts of highly pathogenic avian influenza on the company’s vertically integrated supply chain. Foodservice and whole-bird sales grew on positive pricing, somewhat negated by reduced commodity and retail sales. The segmental profit surged a whopping 537% on elevated commodity prices and foodservice sales.
Net sales in the Refrigerated Foods unit rose 2% year over year. Organic net sales in the segment increased 1%. Volumes decreased 18% and organic volumes tumbled 19%. Net sales were backed by strength in the foodservice business, an improvement in several retail products, gains from pricing actions and contributions from the Planters snack nuts business in the convenience channel. Volumes were hurt by reduced commodity sales stemming from the company's new pork supply deal. The segmental profit moved up 16%.
International & Other net sales slid 5%, while organic net sales declined 6%. Volumes were down 11%, while organic volumes fell 12%. Reduced export sales and soft sales in China were partly compensated by the increased global sales of SPAM luncheon meat and better results in Brazil. The segmental profit fell 9%.
Financial Details
The company’s capital expenditure for the third quarter amounted to $61 million. This Zacks Rank #3 (Hold) player expects to incur capital expenditures of $310 million in fiscal 2022.
Guidance
Hormel Foods remains confident about exceeding its previous sales view for fiscal 2022 due to the solid demand for its foodservice and center store grocery brands, stronger turkey markets and increased pricing actions. That said, the company anticipates cost inflation to persist, especially related to logistics, operations and raw material inputs. Consequently, management pulled down its earnings guidance.
HRL projects fiscal 2022 net sales in the range of $12.2-$12.8 billion now, up from the earlier view of $11.7-$12.5 billion. Earnings per share (EPS) are now envisioned in the range of $1.78-$1.85 compared with the previous band of $1.87-$1.97.
Shares of Hormel Foods have risen 4.1% in the past three months against the industry’s fall of 6.7%.
Chef’s Warehouse, a distributor of specialty food products in the United States, currently sports a Zacks Rank #1 (Strong Buy). CHEF has a trailing four-quarter earnings surprise of 355.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Chef Warehouse’s current financial-year sales suggests growth of 40.7% from the year-ago reported number.
General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks Rank of 2 (Buy). GIS has a trailing four-quarter earnings surprise of 6.5%, on average.
The Zacks Consensus Estimate for General Mills’ current financial-year sales and EPS suggests growth of almost 2% and 1.5%, respectively, from the corresponding year-ago reported figures.
Celsius Holdings, which develops, processes, markets, distributes and sells functional drinks and liquid supplements, carries a Zacks Rank #2 at present. Celsius Holdings delivered an earnings surprise of 50% in the last reported quarter.
The Zacks Consensus Estimate for CELH’s current financial-year sales suggests growth of 97.3% from the year-ago period’s reported figure.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Hormel Foods (HRL) Q3 Earnings Lag Estimates, Revenues Up Y/Y
Hormel Foods Corporation (HRL - Free Report) posted third-quarter fiscal 2022 results, wherein the top and bottom lines increased year over year. However, both the metrics fell short of the Zacks Consensus Estimate. While management raised its sales view for fiscal 2022, it lowered its earnings per share guidance. Shares of the company dipped 6.6% on Sep 1.
Hormel Foods recently unveiled a new operating model to better align its business structure and make it more easygoing, market-driven and consumer and customer-focused. The company’s new strategic model, which will take effect from Oct 31, 2022 (fiscal 2023 beginning), will include three operating units – Retail, Foodservice and International.
Quarter in Detail
Hormel Foods’ earnings of 40 cents per share came a penny lower than the Zacks Consensus Estimate. However, the metric increased from the year-ago quarter’s adjusted earnings of 39 cents per share.
Net sales in the quarter were $3,034.4 million compared to the Zacks Consensus Estimate of $3,070 million. The top line increased 6% year over year, while organic net sales were up 3%. Volumes were 1.1 million lbs, down 11.1% year over year.
Hormel Foods Corporation Price, Consensus and EPS Surprise
Hormel Foods Corporation price-consensus-eps-surprise-chart | Hormel Foods Corporation Quote
Channel-wise, net sales across U.S. Retail and U.S. Foodservice moved up 4% and 14% year over year, respectively, while International sales fell 13% 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. International sales were down due to soft export sales.
SG&A expenses declined to $222.1 million from the $226.3 million reported in the year-ago quarter. The operating income came in at $291 million, up 17% from the adjusted operating income of $248 million in the year-ago period. The operating margin of 9.6% increased from the adjusted operating margin of 8.7% in the same period last year.
Segment Details
Net sales in the Grocery Products unit increased 25%, while organic net sales were up 13% year over year. Volumes were up 15%, while the organic volume was up 8%. Net sales and volumes were driven by the inclusion of the Planters snack nuts business along with the sturdy demand for nut butters, Mexican and simple meals. Organic sales were backed by solid pricing and strength in products like SKIPPY spreads, WHOLLY Guacamole and Hormel chili, to name a few. The segmental profit declined 5% due to cost inflation and reduced results from MegaMex.
Net sales in the Jennie-O Turkey Store segment tumbled 8%, while volumes slumped 20%. Sales were hurt by the adverse supply impacts of highly pathogenic avian influenza on the company’s vertically integrated supply chain. Foodservice and whole-bird sales grew on positive pricing, somewhat negated by reduced commodity and retail sales. The segmental profit surged a whopping 537% on elevated commodity prices and foodservice sales.
Net sales in the Refrigerated Foods unit rose 2% year over year. Organic net sales in the segment increased 1%. Volumes decreased 18% and organic volumes tumbled 19%. Net sales were backed by strength in the foodservice business, an improvement in several retail products, gains from pricing actions and contributions from the Planters snack nuts business in the convenience channel. Volumes were hurt by reduced commodity sales stemming from the company's new pork supply deal. The segmental profit moved up 16%.
International & Other net sales slid 5%, while organic net sales declined 6%. Volumes were down 11%, while organic volumes fell 12%. Reduced export sales and soft sales in China were partly compensated by the increased global sales of SPAM luncheon meat and better results in Brazil. The segmental profit fell 9%.
Financial Details
The company’s capital expenditure for the third quarter amounted to $61 million. This Zacks Rank #3 (Hold) player expects to incur capital expenditures of $310 million in fiscal 2022.
Guidance
Hormel Foods remains confident about exceeding its previous sales view for fiscal 2022 due to the solid demand for its foodservice and center store grocery brands, stronger turkey markets and increased pricing actions. That said, the company anticipates cost inflation to persist, especially related to logistics, operations and raw material inputs. Consequently, management pulled down its earnings guidance.
HRL projects fiscal 2022 net sales in the range of $12.2-$12.8 billion now, up from the earlier view of $11.7-$12.5 billion. Earnings per share (EPS) are now envisioned in the range of $1.78-$1.85 compared with the previous band of $1.87-$1.97.
Shares of Hormel Foods have risen 4.1% in the past three months against the industry’s fall of 6.7%.
Consumer Staple Stocks Worth a Look
Some better-ranked stocks are The Chef's Warehouse (CHEF - Free Report) , General Mills, Inc. (GIS - Free Report) and Celsius Holdings (CELH - Free Report) .
Chef’s Warehouse, a distributor of specialty food products in the United States, currently sports a Zacks Rank #1 (Strong Buy). CHEF has a trailing four-quarter earnings surprise of 355.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Chef Warehouse’s current financial-year sales suggests growth of 40.7% from the year-ago reported number.
General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks Rank of 2 (Buy). GIS has a trailing four-quarter earnings surprise of 6.5%, on average.
The Zacks Consensus Estimate for General Mills’ current financial-year sales and EPS suggests growth of almost 2% and 1.5%, respectively, from the corresponding year-ago reported figures.
Celsius Holdings, which develops, processes, markets, distributes and sells functional drinks and liquid supplements, carries a Zacks Rank #2 at present. Celsius Holdings delivered an earnings surprise of 50% in the last reported quarter.
The Zacks Consensus Estimate for CELH’s current financial-year sales suggests growth of 97.3% from the year-ago period’s reported figure.