Hormel Foods Earns 43 Cents per Share

This morning, Hormel Foods (HRL) reported fiscal Q1 earnings of 43 cents per share. That’s for November, December and January. Hormel’s earnings were six cents better than estimates. Revenues fell 4.3% to $2.29 billion which was a bit below consensus.

The good news is that Hormel raised their full-year 2016 forecast. The original range was $1.43 to $1.48 per share. Now it’s $1.50 to $1.56 per share. In other words, that largely seems to incorporate the six-cent earnings beat.

“We are pleased to report a double-digit earnings increase for the quarter, with four of our five segments posting earnings growth,” said Jeffrey M. Ettinger, chairman of the board and chief executive officer. “This marks our eleventh consecutive quarter of achieving record earnings results.”

“Our commitment to investing in the sustained growth of the business is evident in our results. Our business performance continues to be influenced by our company-wide spirit of innovation, increased brand support, prudent capital investment, and portfolio-expanding acquisitions,” commented Ettinger. “While sales were muted this quarter by turkey supply constraints and lower pricing due to declining pork markets, we enjoyed strong performance from many great products across our portfolio, such as HORMEL GATHERINGS® party trays, APPLEGATE® natural breakfast sausage, HORMEL® FIRE BRAISEDTM meats, MUSCLE MILK®PRO SERIES protein beverages, and WHOLLY GUACAMOLE® refrigerated dips.”

(…)

“Our strong earnings performance in the first quarter, led by Refrigerated Foods, Grocery Products, and Specialty Foods, along with the positive momentum at Jennie-O Turkey Store, has given us confidence to raise our fiscal 2016 earnings guidance range from $1.43 to $1.48 per share to $1.50 to $1.56 per share,” stated James P. Snee, President and Chief Operating Officer.

“We expect favorable input costs to continue for Refrigerated Foods, Grocery Products, and Specialty Foods, while we look for pork operating margins to moderate as the year progresses,” commented Snee. “Our turkey production is on pace to return to normalized levels by the end of the second quarter, positioning Jennie-O Turkey Store for strong growth in the back half of fiscal 2016 with our on-trend portfolio of JENNIE-O® turkey products. We expect International to achieve improved results with increased sales of our SKIPPY® peanut butter and SPAM® family of products.”

“As part of our efforts to drive revenue growth, we are currently investing in our brands through impactful new advertising campaigns for innovations such as our SKIPPY® PB BITES, and core items including HORMEL® pepperoni and MUSCLE MILK® protein products, ” added Snee.

This was a very good earnings report and the market gods are pleased. HRL shares are currently up 6.6% today. At one point this morning, the stock was up more than 10% on the day. Bloomberg notes that this is Hormel’s largest intra-day move in over 10 years.

Posted by on February 16th, 2016 at 12:18 pm


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