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Factors Setting the Tone for Hormel Foods' (HRL) Q2 Earnings
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Hormel Foods Corporation (HRL - Free Report) is slated to report second-quarter fiscal 2021 numbers on May 20. The Zacks Consensus Estimate for revenues is pegged at $2,2420 million, suggesting a dip of 0.1% from the prior-year quarter’s reported figure. The company had witnessed a revenue increase of 3% in the last reported quarter.
The Zacks Consensus Estimate for earnings has remained unchanged over the past 30 days at 42 cents per share, which is in line with the figure reported in the prior-year period. This producer and marketer of several meat and other food products has a trailing four-quarter earnings surprise of nearly 2%, on average.
Hormel Foods Corporation Price, Consensus and EPS Surprise
Hormel Foods has been seeing escalated costs associated with COVID-19. During the first quarter of fiscal 2021, the company absorbed nearly $15 million in direct incremental supply-chain costs, mainly induced by reduced production volumes and better safety measures in its manufacturing facilities amid the pandemic.
We note that incremental supply-chain costs amid the pandemic had also put pressure on the bottom line in the last reported quarter. Persistence of these factors remains a threat to margins in the to-be-reported quarter.
Despite a strong performance in Hormel Foods’ retail business, it has been seeing declines in its foodservice business amid the pandemic. This could be attributed to reduced demand from various foodservice venues like colleges and universities in the wake of COVID-induced social distancing.
These factors raise concerns over the upcoming quarter’s performance. However, on its first-quarter earnings call, the company said that it expects to see some recovery in the foodservice business.
Apart from these, Hormel Foods’ International & Other segment has been performing well for a while now. During the first quarter of fiscal 2021, International & Other sales increased 13% to $183.2 million. In fact, management stated that the International segment is well positioned to grow during fiscal 2021, driven by continued strength in its China business, branded exports and global partnerships.
These factors bode well for the quarter under review. Also, the company’s focus on innovation has been yielding results, while efforts to boost capacity are also noteworthy.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Hormel Foods this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Hormel Foods currently has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.
Stocks With Favorable Combinations
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.
Dollar Tree (DLTR - Free Report) has an Earnings ESP of +1.40% and a Zacks Rank #3.
Burlington Stores (BURL - Free Report) has an Earnings ESP of +36.98% and a Zacks Rank #3.
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Factors Setting the Tone for Hormel Foods' (HRL) Q2 Earnings
Hormel Foods Corporation (HRL - Free Report) is slated to report second-quarter fiscal 2021 numbers on May 20. The Zacks Consensus Estimate for revenues is pegged at $2,2420 million, suggesting a dip of 0.1% from the prior-year quarter’s reported figure. The company had witnessed a revenue increase of 3% in the last reported quarter.
The Zacks Consensus Estimate for earnings has remained unchanged over the past 30 days at 42 cents per share, which is in line with the figure reported in the prior-year period. This producer and marketer of several meat and other food products has a trailing four-quarter earnings surprise of nearly 2%, on average.
Hormel Foods Corporation Price, Consensus and EPS Surprise
Hormel Foods Corporation price-consensus-eps-surprise-chart | Hormel Foods Corporation Quote
Key Factors to Note
Hormel Foods has been seeing escalated costs associated with COVID-19. During the first quarter of fiscal 2021, the company absorbed nearly $15 million in direct incremental supply-chain costs, mainly induced by reduced production volumes and better safety measures in its manufacturing facilities amid the pandemic.
We note that incremental supply-chain costs amid the pandemic had also put pressure on the bottom line in the last reported quarter. Persistence of these factors remains a threat to margins in the to-be-reported quarter.
Despite a strong performance in Hormel Foods’ retail business, it has been seeing declines in its foodservice business amid the pandemic. This could be attributed to reduced demand from various foodservice venues like colleges and universities in the wake of COVID-induced social distancing.
These factors raise concerns over the upcoming quarter’s performance. However, on its first-quarter earnings call, the company said that it expects to see some recovery in the foodservice business.
Apart from these, Hormel Foods’ International & Other segment has been performing well for a while now. During the first quarter of fiscal 2021, International & Other sales increased 13% to $183.2 million. In fact, management stated that the International segment is well positioned to grow during fiscal 2021, driven by continued strength in its China business, branded exports and global partnerships.
These factors bode well for the quarter under review. Also, the company’s focus on innovation has been yielding results, while efforts to boost capacity are also noteworthy.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Hormel Foods this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Hormel Foods currently has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.
Stocks With Favorable Combinations
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.
e.l.f. Beauty (ELF - Free Report) has an Earnings ESP of +17.86% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dollar Tree (DLTR - Free Report) has an Earnings ESP of +1.40% and a Zacks Rank #3.
Burlington Stores (BURL - Free Report) has an Earnings ESP of +36.98% and a Zacks Rank #3.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
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