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Hormel Foods (HRL) Misses on Q2 Earnings, Reaffirms View
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Meat and food products company, Hormel Foods Corporation (HRL - Free Report) , reported weaker-than-expected results for second-quarter fiscal 2018 (ended April 2018).
Earnings/Revenues
Adjusted earnings in the reported quarter came in at 44 cents per share, missing the Zacks Consensus Estimate by a penny. However, the bottom line came in higher than the year-ago figure of 39 cents per share.
Net sales in the fiscal second quarter came in at $2,330.6 million, missing the Zacks Consensus Estimate of $2,390 million. However, the top line came in 6.5% higher than the year-ago tally.
Segmental Break-Up
In the reported quarter, revenues from Grocery Products edged down 1.4% to $631.6 million.
Revenues at the Jennie-O Turkey Store segment dropped 4.2% to $371.9 million.
The company’s Refrigerated Foods segment generated revenues of $1,167 million, up 13.6% year over year.
International & Other revenues were up 22.1% to nearly $160.1 million.
Hormel Foods Corporation Price, Consensus and EPS Surprise
In the fiscal second quarter, Hormel Foods’ cost of sales went up 7.9% year over year to $1,833.9 million. Gross margin contracted 100 basis points (bps) to 21.3%.
Selling, general and administrative expenses totaled $203.8 million, up from $181 million recorded in the comparable period last fiscal.
The company’s operating margin came in at 13.1%, shrinking 130 bps year over year.
Balance Sheet/Cash Flow
Exiting the fiscal second quarter, Hormel Foods had cash and cash equivalents of $261.6 million, from from $444.1 million as of Oct 29, 2017. Long-term debt came in at $624.8 million (excluding current maturities), up from $250 million reported as of the end of fiscal 2017.
In the first half of fiscal 2018, Hormel Foods generated cash of $443.3 million from operating activities, significantly up 58% year over year. Capital expenditure on purchase of property and plant summed $134.7 million compared with $75.8 million incurred in the prior-year period.
Outlook
Hormel Foods has reaffirmed its earnings and sales guidance for fiscal 2018 (ending October 2018). This Zacks Rank #3 (Hold) company projects revenues of $9.7-$10.1 billion and earnings in the $1.81-$1.95 per share band, for the current fiscal. Stronger demand for major brands will likely boost the company’s near-term revenues but prevalent turkey market challenges remain concerns.
Pilgrim's Pride Corporation (PPC - Free Report) holds a Zacks Rank #2 (Buy). It generated an average positive earnings surprise of 11.07%, over the trailing four quarters.
United Natural Foods, Inc. (UNFI - Free Report) also carries a Zacks Rank of 2. It generated an average positive earnings surprise of 10.74%, during the same time frame.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Hormel Foods (HRL) Misses on Q2 Earnings, Reaffirms View
Meat and food products company, Hormel Foods Corporation (HRL - Free Report) , reported weaker-than-expected results for second-quarter fiscal 2018 (ended April 2018).
Earnings/Revenues
Adjusted earnings in the reported quarter came in at 44 cents per share, missing the Zacks Consensus Estimate by a penny. However, the bottom line came in higher than the year-ago figure of 39 cents per share.
Net sales in the fiscal second quarter came in at $2,330.6 million, missing the Zacks Consensus Estimate of $2,390 million. However, the top line came in 6.5% higher than the year-ago tally.
Segmental Break-Up
In the reported quarter, revenues from Grocery Products edged down 1.4% to $631.6 million.
Revenues at the Jennie-O Turkey Store segment dropped 4.2% to $371.9 million.
The company’s Refrigerated Foods segment generated revenues of $1,167 million, up 13.6% year over year.
International & Other revenues were up 22.1% to nearly $160.1 million.
Hormel Foods Corporation Price, Consensus and EPS Surprise
Hormel Foods Corporation Price, Consensus and EPS Surprise | Hormel Foods Corporation Quote
Costs/Margins
In the fiscal second quarter, Hormel Foods’ cost of sales went up 7.9% year over year to $1,833.9 million. Gross margin contracted 100 basis points (bps) to 21.3%.
Selling, general and administrative expenses totaled $203.8 million, up from $181 million recorded in the comparable period last fiscal.
The company’s operating margin came in at 13.1%, shrinking 130 bps year over year.
Balance Sheet/Cash Flow
Exiting the fiscal second quarter, Hormel Foods had cash and cash equivalents of $261.6 million, from from $444.1 million as of Oct 29, 2017. Long-term debt came in at $624.8 million (excluding current maturities), up from $250 million reported as of the end of fiscal 2017.
In the first half of fiscal 2018, Hormel Foods generated cash of $443.3 million from operating activities, significantly up 58% year over year. Capital expenditure on purchase of property and plant summed $134.7 million compared with $75.8 million incurred in the prior-year period.
Outlook
Hormel Foods has reaffirmed its earnings and sales guidance for fiscal 2018 (ending October 2018). This Zacks Rank #3 (Hold) company projects revenues of $9.7-$10.1 billion and earnings in the $1.81-$1.95 per share band, for the current fiscal. Stronger demand for major brands will likely boost the company’s near-term revenues but prevalent turkey market challenges remain concerns.
Stocks to Consider
Some better-ranked stocks in the Zacks Consumer Staples sector are listed below:
Inter Parfums, Inc. (IPAR - Free Report) sports a Zacks Rank #1 (Strong Buy). The company pulled off an average positive earnings surprise of 11.82% over the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
Pilgrim's Pride Corporation (PPC - Free Report) holds a Zacks Rank #2 (Buy). It generated an average positive earnings surprise of 11.07%, over the trailing four quarters.
United Natural Foods, Inc. (UNFI - Free Report) also carries a Zacks Rank of 2. It generated an average positive earnings surprise of 10.74%, during the same time frame.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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