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Consumer brand meat and food products company, Hormel Foods Corporation (HRL - Analyst Report) is set to report fiscal second quarter 2013 results on May 23. Last quarter it posted a 2.04% negative surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Hormel has been experiencing a rise in most of its major segments, pushing up its total revenue. Last reported quarter, it saw a year-over-year revenue rise of 3.8%, led by a gain in four of its five business segments. Also, management expects Grocery Products, Specialty Foods and All Other segments to continue prospering in the coming quarters. Refrigerated Foods segment, which was undergoing problems in the previous quarters, is expected to report better results in the current quarter.

However, the increasing cost of raw materials, leading to a decline in the company’s margins cannot be overlooked. Management also feels that Jennie-O Turkey will continue to face headwinds in a few quarters ahead.

Earnings Whispers?

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

Neutral Zacks ESP:  This is because the Most Accurate Estimate stands at 48 cents while the Zacks Consensus Estimate is equal at 48 cents. That is, there is a difference of 0.00%.

Zacks Rank #2 (Buy): Hormel’s Zacks Rank #2 (Buy) when combined with a neutral ESP makes a surprise prediction difficult. We caution against stocks with Zacks #4 and #5 Ranks (Sell rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.

Other Stocks to Consider

Here are some other consumer goods companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Flowers Foods, Inc. (FLO - Snapshot Report), Earnings ESP of 9.38% and a Zacks Rank #1 (Strong Buy)

SodaStream International Ltd. (SODA - Snapshot Report), Earnings ESP of 1.72% and a Zacks Rank #2 (Buy)

Chiquita Brands International (CQB - Snapshot Report), Earnings ESP of 10.87% and a Zacks Rank #3 (Hold).

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