Back to top

Analyst Blog

Hormel Foods Corporation (HRL - Analyst Report), the food products company, is set to report fiscal second-quarter 2014 results (ended Apr 2014) on May 21, before the opening bell. It had posted in line results in the preceding quarter. Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

The diversified portfolio of the company will help it to grow in the coming quarters. Moreover, Hormel has also been growing inorganically. The acquisition of Skippy peanut butter line, completed in January last year has been significantly accretive to the company’s top and bottom line growth. Moreover, Hormel completed the acquisition of Skippy’s business in China at the beginning of fiscal first-quarter 2014. The business is expected to grow in the upcoming quarters, further improving revenues and margins.

Most of the segments of the company are also performing well. The Refrigerated Foods segment is expected to continue growing in the quarters ahead. The company also hopes to attain greater success with its products including Hormel Rev snack wraps and Hormel Fire Braised meats.

Earnings Whispers?

Our proven model does not conclusively show that Hormel will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zero Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 56 cents. Hence, the difference is 0.00%.

Zacks Rank #3 (Hold): Hormel carries a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

Notably, we caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the co mpany is seeing negative estimate revisions momentum.

Other Stocks to Consider

You could consider otherstocks in the sector having both a positive Earnings ESP and a favorable Zacks Rank:

Sanderson Farms, Inc. (SAFM - Snapshot Report), with an Earnings ESP of +2.44% and a Zacks Rank #1 (Strong Buy).

The Hain Celestial Group, Inc. (HAIN - Analyst Report), with an Earnings ESP of +1.14% and a Zacks Rank #2 (Buy).

General Mills, Inc. (GIS - Analyst Report), with an Earnings ESP of +2.86% and a Zacks Rank #3.

Please login to Zacks.com or register to post a comment.