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Hormel Foods' (HRL) Q2 Earnings Miss, Revenues Down Y/Y
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Meat and food products company, Hormel Foods Corporation (HRL - Free Report) reported weaker-than-expected results for second-quarter fiscal 2017.
On a quarter-to-date basis, shares of this Zacks Rank #3 (Hold) stock have yielded a return of 2.2%, in stark contrast to the Zacks classified Food-Meat Products industry’s decline of 0.6% over the same period.
Bottom-Line Performance
Quarterly adjusted earnings came in at 39 cents per share, a penny lower than the year-ago tally. Also, the bottom line missed the Zacks Consensus Estimate of 40 cents.
Quarter in Details
In the fiscal second quarter, Hormel Foods generated net sales of $2,187.3 million, which reflected a decline of 4.9% year over year. The top line also fell short of the Zacks Consensus Estimate of $2,221.5 million.
Hormel Foods’ cost of sales slid down 4.1% to $1,727.9 million. Gross margin contracted 6 basis points (bps) to 22.6%.
Quarterly selling, general and administrative expenses came in at $181 million, as against $211.1 million recorded in the year-ago period.
The company’s operating margin was 14.5% compared to 14.1% in the prior-year quarter.
Segmental Performance
In the reported quarter, revenues from Grocery Products improved 7.7% to $432.2 million.
Revenues at the Jennie-O Turkey Store segment declined 8.3% to $388.2 million.
The company’s Refrigerated Foods segment generated revenues of $1,027 million, down 5.9% year over year.
International & Other revenues rose 19% to $131.2 million
Specialty Foods revenues were down 23.6% to $208.2 million.
Balance Sheet and Cash Flow
Exiting the fiscal second quarter, Hormel Foods had cash and cash equivalents of $548.9 million, up from $415.1 million as of Oct 30, 2016. However, the company’s long-term debt of $250 million (excluding current maturities) remained unchanged.
For the fiscal second quarter, Hormel Foods generated cash of $261.2 million from operating activities, plunging 36.2% year over year.
The company paid its 355th consecutive quarterly dividend at an annualized rate of 68 cents, effective May 15, 2017.
Outlook
Hormel Foods reiterated its earlier projection of earnings within the range of $1.65–$1.71 per share for fiscal 2017. However, the company expects its performance to be hurt due to the dismal conditions prevailing in the turkey industry. Nonetheless, the company is poised to grow on the back of its balanced business model.
Stocks to Consider
Some better-ranked stocks in a similar space are listed below:
Aramark (ARMK - Free Report) presently carries a Zacks Rank #2 and has an average positive earnings surprise of 4.5% for the last four quarters.
Energizer Holdings, Inc. (ENR - Free Report) , which also carries a Zacks Rank #2, generated an average positive earnings surprise of 21.6% over the past four quarters.
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Hormel Foods' (HRL) Q2 Earnings Miss, Revenues Down Y/Y
Meat and food products company, Hormel Foods Corporation (HRL - Free Report) reported weaker-than-expected results for second-quarter fiscal 2017.
On a quarter-to-date basis, shares of this Zacks Rank #3 (Hold) stock have yielded a return of 2.2%, in stark contrast to the Zacks classified Food-Meat Products industry’s decline of 0.6% over the same period.
Bottom-Line Performance
Quarterly adjusted earnings came in at 39 cents per share, a penny lower than the year-ago tally. Also, the bottom line missed the Zacks Consensus Estimate of 40 cents.
Quarter in Details
In the fiscal second quarter, Hormel Foods generated net sales of $2,187.3 million, which reflected a decline of 4.9% year over year. The top line also fell short of the Zacks Consensus Estimate of $2,221.5 million.
Hormel Foods’ cost of sales slid down 4.1% to $1,727.9 million. Gross margin contracted 6 basis points (bps) to 22.6%.
Quarterly selling, general and administrative expenses came in at $181 million, as against $211.1 million recorded in the year-ago period.
The company’s operating margin was 14.5% compared to 14.1% in the prior-year quarter.
Segmental Performance
In the reported quarter, revenues from Grocery Products improved 7.7% to $432.2 million.
Revenues at the Jennie-O Turkey Store segment declined 8.3% to $388.2 million.
The company’s Refrigerated Foods segment generated revenues of $1,027 million, down 5.9% year over year.
International & Other revenues rose 19% to $131.2 million
Specialty Foods revenues were down 23.6% to $208.2 million.
Balance Sheet and Cash Flow
Exiting the fiscal second quarter, Hormel Foods had cash and cash equivalents of $548.9 million, up from $415.1 million as of Oct 30, 2016. However, the company’s long-term debt of $250 million (excluding current maturities) remained unchanged.
For the fiscal second quarter, Hormel Foods generated cash of $261.2 million from operating activities, plunging 36.2% year over year.
The company paid its 355th consecutive quarterly dividend at an annualized rate of 68 cents, effective May 15, 2017.
Outlook
Hormel Foods reiterated its earlier projection of earnings within the range of $1.65–$1.71 per share for fiscal 2017. However, the company expects its performance to be hurt due to the dismal conditions prevailing in the turkey industry. Nonetheless, the company is poised to grow on the back of its balanced business model.
Stocks to Consider
Some better-ranked stocks in a similar space are listed below:
Tupperware Brands Corporation (TUP - Free Report) has an average positive earnings surprise of 6.6% for the trailing four quarters and currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Aramark (ARMK - Free Report) presently carries a Zacks Rank #2 and has an average positive earnings surprise of 4.5% for the last four quarters.
Energizer Holdings, Inc. (ENR - Free Report) , which also carries a Zacks Rank #2, generated an average positive earnings surprise of 21.6% over the past four quarters.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>