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.
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).
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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.
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 >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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