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Hormel Foods (HRL) is in a Tough Spot for 2024, Hurt by Costs
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Hormel Foods Corporation (HRL - Free Report) continues to operate in a dynamic operating landscape. In this regard, the company is battling inflationary headwinds. Weakness in the International segment remains a threat to the leading manufacturer and marketer of various meat and food products.
Unimpressively, the Zacks Consensus Estimate for Hormel Foods’ first-quarter fiscal 2024 quarterly earnings of 35 cents suggests a decline of 12.5% from the year-ago quarter’s levels.
Shares of the Zacks Rank #5 (Strong Sell) company have declined 24.4% in the past six months against the industry’s 10.9% decline. The stock underperformed the Zacks Consumer Staple sector’s decrease of 5.6% during this time.
Let’s delve deeper.
High Costs Stay
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.
Weakness in International Business
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.
Wrapping Up
Hormel Foods is on track with strategic investments to boost its capacity. The company’s One Supply Chain initiative is aimed at reducing costs and complexity while investing in long-term growth. Moreover, management is on track to transforming and modernizing the company.
However, whether these factors can help Hormel Foods stay afloat amid hurdles is yet to be seen.
Appetizing Food Bets
Ingredion Incorporated (INGR - Free Report) , which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, sports a Zacks Rank #1 (Strong Buy). INGR delivered a positive earnings surprise of 23.9% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
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.
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.
The Zacks Consensus Estimate for Sysco’s current fiscal sales and earnings suggests growth of 4.1% and almost 8%, respectively, from the corresponding year-ago reported figure.
Lamb Weston (LW - Free Report) , which offers frozen potato products, currently carries a Zacks Rank #2. LW delivered an earnings surprise of 3.6% in the last reported quarter.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings implies growth of 28.2% and 26.9%, respectively, from the year-ago reported numbers.
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Hormel Foods (HRL) is in a Tough Spot for 2024, Hurt by Costs
Hormel Foods Corporation (HRL - Free Report) continues to operate in a dynamic operating landscape. In this regard, the company is battling inflationary headwinds. Weakness in the International segment remains a threat to the leading manufacturer and marketer of various meat and food products.
Unimpressively, the Zacks Consensus Estimate for Hormel Foods’ first-quarter fiscal 2024 quarterly earnings of 35 cents suggests a decline of 12.5% from the year-ago quarter’s levels.
Shares of the Zacks Rank #5 (Strong Sell) company have declined 24.4% in the past six months against the industry’s 10.9% decline. The stock underperformed the Zacks Consumer Staple sector’s decrease of 5.6% during this time.
Let’s delve deeper.
High Costs Stay
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.
Weakness in International Business
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.
Wrapping Up
Hormel Foods is on track with strategic investments to boost its capacity. The company’s One Supply Chain initiative is aimed at reducing costs and complexity while investing in long-term growth. Moreover, management is on track to transforming and modernizing the company.
However, whether these factors can help Hormel Foods stay afloat amid hurdles is yet to be seen.
Appetizing Food Bets
Ingredion Incorporated (INGR - Free Report) , which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, sports a Zacks Rank #1 (Strong Buy). INGR delivered a positive earnings surprise of 23.9% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
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.
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.
The Zacks Consensus Estimate for Sysco’s current fiscal sales and earnings suggests growth of 4.1% and almost 8%, respectively, from the corresponding year-ago reported figure.
Lamb Weston (LW - Free Report) , which offers frozen potato products, currently carries a Zacks Rank #2. LW delivered an earnings surprise of 3.6% in the last reported quarter.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings implies growth of 28.2% and 26.9%, respectively, from the year-ago reported numbers.