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Shares of Hormel Foods Corporation (HRL - Analyst Report) reached a new 52-week high of $47.79 during its trading session on Feb 28. This marks a nominal increase from the previous high of $47.51 hit two days ago.

Hormel closed the trading day on Feb 28 at $47.45, reflecting a solid return of 29.1% in the past year. The trading volume for the session was 609K shares. The food products company’s expected earnings growth rate of 9.7% over the next five years reflects that it has potential for further accretion.

Growth Drivers

Hormel posted impressive results for the first quarter of fiscal 2014 (ended Jan 26, 2014). Adjusted earnings per share came in at 57 cents, up 19% from the year ago quarter. Shares have risen 4.7% after the results were announced before the opening bell on Feb 20.

In the first quarter, revenues grew roughly 6% year over year to $2.2 billion. In the quarter, all the segments experienced a rise in revenues with the exception of Specialty Foods segment which dropped 16.2% year over year to $196.0 million.  Moreover, revenues were helped by a significant contribution from the acquisition of Skippy peanut butter line.

Hormel is optimistic of great results in the quarters ahead based on its organic as well as inorganic growth. The company also hopes to attain greater success with its products including Hormel Rev snack wraps and Hormel Fire Braised meats.

However, increase in fuel costs and restrained raw material supply may hamper the results. In view of this, management maintained its earnings per share guidance for fiscal 2014 in the range of $2.17 to $2.27.

The impressive results for the quarter combined with an average earnings surprise of +1.43% makes us hopeful of a strong future for the company. Hormel currently has an Earnings ESP of +2.22% for fiscal 2014 and 1.98% for fiscal 2015.

The Zacks Consensus Estimate for Hormel is at $2.25 for fiscal 2014 and at $2.52 for fiscal 2015, reflecting year-over-year growth of 15.5% and 11.8%, respectively.

Other Stocks to Consider

Hormel currently has a market capitalization of $12.5 billion. Few stocks to watch out for in the industry include Tyson Foods, Inc. (TSN - Analyst Report), Sanderson Farms, Inc. (SAFM - Snapshot Report) and The Hillshire Brands Co. .While Tyson Foods and Sanderson Farms sport a Zacks Rank #1 (Strong Buy), Hillshire Brands carries a Zacks Rank #2 (Buy).

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