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Adjusted earnings came in at 36 cents per share, reflecting a 33.3% surge from the year-ago tally of 27 cents, and surpassed the Zacks Consensus Estimate of 34 cents.
Hormel Foods generated net revenue of $2,302.4 million, up 5.2% year over year, beat the Zacks Consensus Estimate of $2,238 million.
Hormel Foods’ cost of sales was up 2.7% to $1,827.1 million, representing 79.4% of net revenue versus 81.3% in the year-ago quarter. Gross margin expanded 190 basis points (bps) to 20.6%.
Selling, general and administrative expenses of $206.9 million (up 12.1% year over year) comprised roughly 9% of net revenue. The company’s operating margin was 11.9% compared to 10.6% in the year-ago quarter.
Segment Details
In the reported quarter, revenues from Grocery Products improved 2.9% to $399.3 million.
Revenues at the Jennie-O Turkey Store segment jumped 20% to $404 million.
Specialty Foods revenues tanked 25% to $212.2 million.
The company’s Refrigerated Foods segment garnered revenues of $1,155.3 million, up 9.4% year over year.
Lastly, International & Other revenues were up 5.2% to $131.6 million.
Other Financial Particulars
Exiting the third quarter of fiscal 2016, Hormel Foods had cash and cash equivalents of $379.6 million, up from $347.2 million as of Oct 25, 2015. However, the company’s long-term debt of $250 million (excluding current maturities) was mostly unchanged.
For the first nine months of fiscal 2016, Hormel Foods generated cash of $621.7 million from operating activities, down 9.9% year over year. Capital expenditure on purchase of property and plant totaled $163.2 million, compared to $81.8 million a year ago.
The company paid its 352nd consecutive quarterly dividend at an annualized rate of 58 cents, effective Aug 15, 2016.
Outlook
Hormel Foods has raised its full-year fiscal 2016 earnings guidance to the range of $1.60–$1.64 per share from the previous projection of $1.56–$1.60. The company expects higher international, Jennie-O Turkey Store and Refrigerated Foods sales to boost aggregate full-year revenue.
As of Aug 17, Hormel Foods closed the trading session at $36.35 per share. It is yet to be seen how investors react to the stock’s third-quarter performance.
Hormel Foods currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks within the industry include Tyson Foods, Inc. (TSN - Free Report) , Sanderson Farms, Inc. and Apollo Education Group, Inc. . Both Tyson Foods and Sanderson Farms sport a Zacks Rank #1 (Strong Buy), while Apollo Education Group has a Zacks Rank #2 (Buy).
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Hormel (HRL) Beats on Q3 Earnings, Raises FY16 Guidance
Meat and food products company, Hormel Foods Corporation (HRL - Free Report) reported strong results for third-quarter fiscal 2016 (ended Jul 24, 2016).
Adjusted earnings came in at 36 cents per share, reflecting a 33.3% surge from the year-ago tally of 27 cents, and surpassed the Zacks Consensus Estimate of 34 cents.
Inside the Headlines
Hormel Foods generated net revenue of $2,302.4 million, up 5.2% year over year, beat the Zacks Consensus Estimate of $2,238 million.
Hormel Foods’ cost of sales was up 2.7% to $1,827.1 million, representing 79.4% of net revenue versus 81.3% in the year-ago quarter. Gross margin expanded 190 basis points (bps) to 20.6%.
Selling, general and administrative expenses of $206.9 million (up 12.1% year over year) comprised roughly 9% of net revenue. The company’s operating margin was 11.9% compared to 10.6% in the year-ago quarter.
Segment Details
In the reported quarter, revenues from Grocery Products improved 2.9% to $399.3 million.
Revenues at the Jennie-O Turkey Store segment jumped 20% to $404 million.
Specialty Foods revenues tanked 25% to $212.2 million.
The company’s Refrigerated Foods segment garnered revenues of $1,155.3 million, up 9.4% year over year.
Lastly, International & Other revenues were up 5.2% to $131.6 million.
Other Financial Particulars
Exiting the third quarter of fiscal 2016, Hormel Foods had cash and cash equivalents of $379.6 million, up from $347.2 million as of Oct 25, 2015. However, the company’s long-term debt of $250 million (excluding current maturities) was mostly unchanged.
For the first nine months of fiscal 2016, Hormel Foods generated cash of $621.7 million from operating activities, down 9.9% year over year. Capital expenditure on purchase of property and plant totaled $163.2 million, compared to $81.8 million a year ago.
The company paid its 352nd consecutive quarterly dividend at an annualized rate of 58 cents, effective Aug 15, 2016.
Outlook
Hormel Foods has raised its full-year fiscal 2016 earnings guidance to the range of $1.60–$1.64 per share from the previous projection of $1.56–$1.60. The company expects higher international, Jennie-O Turkey Store and Refrigerated Foods sales to boost aggregate full-year revenue.
As of Aug 17, Hormel Foods closed the trading session at $36.35 per share. It is yet to be seen how investors react to the stock’s third-quarter performance.
HORMEL FOODS CP Price, Consensus and EPS Surprise
HORMEL FOODS CP Price, Consensus and EPS Surprise | HORMEL FOODS CP Quote
Stocks to Consider
Hormel Foods currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks within the industry include Tyson Foods, Inc. (TSN - Free Report) , Sanderson Farms, Inc. and Apollo Education Group, Inc. . Both Tyson Foods and Sanderson Farms sport a Zacks Rank #1 (Strong Buy), while Apollo Education Group has a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>