We expect Hormel Foods Corporation (HRL - Free Report) to beat expectations when it reports fourth-quarter fiscal 2016 (ended Oct 31, 2016) results before the opening bell on Nov 22, 2016.
Why a Likely Positive Surprise?
Our proven model shows that Hormel Foods has the right combination of two key ingredients.
Zacks ESP: Hormel Foods has an Earnings ESP of +6.67%, as the Most Accurate estimate of 48 cents comes above the Zacks Consensus Estimate of 45 cents.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Hormel Foods’ Zacks Rank #3 (Hold), when combined with a positive ESP, predicts a possible earnings beat. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
We only caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.
What is Driving the Better-Than-Expected Earnings?
Hormel Foods conducts its business in the meat industry that is minimally impacted by the turbulent global economy in the last few quarters. The company believes that demand for value-added products in both food service and retail channels would boost revenues of its Refrigerated Foods segment in the quarter to be reported.
Revenues of Jennie-O Turkey Store segment would likely be higher in the fiscal fourth quarter, on the back of the company’s make-the-switch campaign’s success. On the other hand, higher demand for SPAM luncheon meat, Wholly Guacamole dips and SKIPPY peanut butter are expected to bolster sales of the International segment.
Also, Hormel Foods has raised its 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 has raised its earnings outlook after considering the benefits of higher sales, lower grain input costs and greater operational efficacy.
Stocks to Consider
Here are some stocks within the industry that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Sanderson Farms, Inc. (SAFM - Free Report) , with an Earnings ESP of +4.48% and a Zacks Rank #1.
Vail Resorts Inc. (MTN - Free Report) , with an Earnings ESP of +4.46% and a Zacks Rank #1.
Sysco Corporation (SYY - Free Report) , with an Earnings ESP of +1.89% and a Zacks Rank #2 (Buy).
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