We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Hormel Foods (HRL) Dull on High Costs & Soft International Unit
Read MoreHide Full Article
Hormel Foods Corporation (HRL - Free Report) appears in a tight spot thanks to macroeconomic headwinds like inflationary pressures. The leading manufacturer and marketer of various meat and food products is battling weakness in the International business, which is hurting its performance.
Consequently, the company’s fourth-quarter fiscal 2023 top and the bottom line declined year over year. Both metrics missed the Zacks Consensus Estimate in the quarter. Shares of the Zacks Rank #5 (Strong Sell) company have declined 12.9% in the past three months against the industry’s 1.8% growth.
Let’s delve deeper.
High Costs: Major Concern
Hormel Foods continues to operate in a dynamic operating landscape, including sluggish consumer demand, inflationary hurdles and challenges in the company’s turkey business. Also, the company has been witnessing rising advertising expenses for a while. During the fiscal 2023, the company’s advertising investments were $160 million, up from $157 million reported in the year-ago period. In its last earnings call, management highlighted that it expects advertising investments to remain escalated during the fiscal 2024 as it continues to support leading brands in the marketplace. Certainly, a rise in such costs is likely to put pressure on the company’s profits.
Soft International Business Hurts
Hormel Foods has been battling weakness in the International segment for a while. The fiscal 2023 remained particularly challenging for this business, thanks to softness in China, soft commodity markets and higher-than-anticipated elasticities on branded export business. In the fiscal fourth quarter, International net sales declined 12% due to reduced branded export sales and soft sales in China. In its last earnings call, management highlighted that it expects results in the first quarter of fiscal 2024 to remain drab in the particular segment, with recovery starting in the second quarter.
Final Thoughts
Hormel Foods is on track to transforming and modernizing the company. Management has been committed to strengthening its business on the back of strategic acquisitions. The company remains focused on initiatives like One Supply Chain, aimed at reducing costs and complexity while investing in long-term growth.
All said, whether the factors can help HRL stay afloat amid the downsides mentioned above is yet to be seen.
Looking For Better-Ranked Staple Picks? Check These Out
The Zacks Consensus Estimate for Sysco’s current fiscal year sales and earnings suggests growth of 5.2% and almost 8%, respectively, from the corresponding year-ago reported figure.
Nomad Foods (NOMD - Free Report) , carrying a Zacks Rank #2, manufactures and distributes frozen foods. NOMD has a trailing four-quarter earnings surprise of 7.7%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial-year sales suggests growth of 6.6% from the prior-year reported number. However, earnings estimates suggest a year-over-year decline of 2.3%.
Ingredion Incorporated (INGR - Free Report) , which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, holds a Zacks Rank #2. INGR delivered a positive earnings surprise of 23.9% in the last reported quarter.
The Zacks Consensus Estimate for Ingredion Incorporated’s current financial year sales and earnings suggests growth of around 5% and 24.7%, respectively, from the year-ago reported numbers.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Hormel Foods (HRL) Dull on High Costs & Soft International Unit
Hormel Foods Corporation (HRL - Free Report) appears in a tight spot thanks to macroeconomic headwinds like inflationary pressures. The leading manufacturer and marketer of various meat and food products is battling weakness in the International business, which is hurting its performance.
Consequently, the company’s fourth-quarter fiscal 2023 top and the bottom line declined year over year. Both metrics missed the Zacks Consensus Estimate in the quarter. Shares of the Zacks Rank #5 (Strong Sell) company have declined 12.9% in the past three months against the industry’s 1.8% growth.
Let’s delve deeper.
High Costs: Major Concern
Hormel Foods continues to operate in a dynamic operating landscape, including sluggish consumer demand, inflationary hurdles and challenges in the company’s turkey business. Also, the company has been witnessing rising advertising expenses for a while. During the fiscal 2023, the company’s advertising investments were $160 million, up from $157 million reported in the year-ago period. In its last earnings call, management highlighted that it expects advertising investments to remain escalated during the fiscal 2024 as it continues to support leading brands in the marketplace. Certainly, a rise in such costs is likely to put pressure on the company’s profits.
Soft International Business Hurts
Hormel Foods has been battling weakness in the International segment for a while. The fiscal 2023 remained particularly challenging for this business, thanks to softness in China, soft commodity markets and higher-than-anticipated elasticities on branded export business. In the fiscal fourth quarter, International net sales declined 12% due to reduced branded export sales and soft sales in China. In its last earnings call, management highlighted that it expects results in the first quarter of fiscal 2024 to remain drab in the particular segment, with recovery starting in the second quarter.
Final Thoughts
Hormel Foods is on track to transforming and modernizing the company. Management has been committed to strengthening its business on the back of strategic acquisitions. The company remains focused on initiatives like One Supply Chain, aimed at reducing costs and complexity while investing in long-term growth.
All said, whether the factors can help HRL stay afloat amid the downsides mentioned above is yet to be seen.
Looking For Better-Ranked Staple Picks? Check These Out
Sysco Corporation (SYY - Free Report) , a food and related product company, currently has a Zacks Rank #2 (Buy). SYY delivered a positive earnings surprise in the last two quarters. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Sysco’s current fiscal year sales and earnings suggests growth of 5.2% and almost 8%, respectively, from the corresponding year-ago reported figure.
Nomad Foods (NOMD - Free Report) , carrying a Zacks Rank #2, manufactures and distributes frozen foods. NOMD has a trailing four-quarter earnings surprise of 7.7%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial-year sales suggests growth of 6.6% from the prior-year reported number. However, earnings estimates suggest a year-over-year decline of 2.3%.
Ingredion Incorporated (INGR - Free Report) , which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, holds a Zacks Rank #2. INGR delivered a positive earnings surprise of 23.9% in the last reported quarter.
The Zacks Consensus Estimate for Ingredion Incorporated’s current financial year sales and earnings suggests growth of around 5% and 24.7%, respectively, from the year-ago reported numbers.