This page is temporarily not available. Please check later as it should be available shortly. If you have any questions, please email customer support at firstname.lastname@example.org or call 800-767-3771 ext. 9339.
While Smithfield Foods has generated positive surprises in the past, it has not done very well this year, missing the Zacks Consensus Estimate by 18.9% and 11.1% in the April and July quarters, respectively. This in turn pulled down the average surprise percentage to -4.2% in the trailing four quarters.
Smithfield Foods is one of the worst affected by the poor corn crop this year, which increased feed costs in the last-reported quarter, in turn increasing the cost of hog production. Ample hog supply also impacted hog pricing, thus cutting margins on both counts.
Pork segment restructuring initiatives are a positive, and higher slaughtering could stem margin contraction here. But the effect is unlikely to be long-lived, as weak demand will soon lead to packaged inventory build-up, which will again impact prices, and therefore, margins.
In the last 60 days, there were a couple of downward revisions in estimates for the October quarter, which had the Zacks Consensus Estimate moving down 2 cents (4.5%) to 44 cents. Estimates for fiscal years 2013 and 2014 have moved up however, from $1.82 to $1.84 (1.1%) and from $2.19 to $2.26 (3.2%), respectively.
The Zacks ESP (Expected Surprise Prediction) is -13.64% for the October quarter, indicating that the company is likely to miss estimates this quarter.
Performance across the sector has been mixed so far, with Zhongpin Inc (HOGS - Snapshot Report) missing the Zacks Consensus by 23.1%, Tyson Foods (TSN - Analyst Report)), beating the Zacks Consensus by 27.9% and Hormel Foods (HRL - Analyst Report) reporting in line. Sanderson Farms (SAFM - Snapshot Report) is yet to report and given its Zacks ESP of 41.38%, it is unlikely to disappoint.
SmithField, Hormel and Sanderson currently have a Zacks Rank #3 (Hold), compared with Zhongpin, which has a Zacks Rank #5 (Strong Sell) and Tyson Foods, which has a Zacks Rank #2 (Buy).
Please login to Zacks.com or register to post a comment.