Hormel Foods (HRL) Reports Mixed Earnings
Shares of Hormel Foods Corporation (HRL), stumbled recently after the food company reported mixed second quarter earnings. The company, which manufactures Spam luncheon meats, Skippy peanut butter and Jennie-O Turkey, reported adjusted earnings of $0.46 per share, or $125.5 million, a decline from the $0.48 per share, or $127.9 million, it reported in the prior year quarter. Although earnings per share came in higher due to share count, net income actually slid 2%.
Sales rose 6.9% year-on-year to $2.15 billion. Both its bottom and top line results came in short of the consensus estimate for earnings of $0.49 per share on revenue of $2.19 billion. Daily Chart
Hormel attributed its mixed earnings to its acquisition of Skippy from Unilever (UN
) for $700 million in January, rising grain costs and lower turkey prices. The company's refrigerated foods segment, which accounts for nearly half of the company's top line, declined 2% due to higher grain costs. Its grocery products segment, which includes Spam and comprises 18% of its top line, rose 49% to $393.5 million, thanks to Skippy peanut butter, Spam, Dinty Moore stew and Mary Kitchen hash. Hormel's Jennie-O Turkey Store, which accounts for 18% of its top line, reported a 2% sales decline to $384.7 million due to higher grain costs and waning demand for turkey. Specialty Foods, its smallest segment, reported a 7% year-on-year increase to $245.7 million. Lastly, its international sales climbed 21.1% to $117.4 million thanks to international demand for its Spam products, especially in the emerging markets and Asia. In terms of operating profit, Hormel's Jennie-O Turkey Store fared the worst, with a 25.9% year-on-year decline, while Specialty Foods rose the most, with a 24.5% gain. Grocery Products' operating profit rose 10.4% while sales of its Refrigerated Foods gained 3.2%. Hormel's cash and equivalents notably plunged to $262.7 million, down from $887.7 million last quarter. However, its long-term debt remained unchanged at $250.0 million. Looking forward, Hormel expects demand for its Specialty Foods to cool off, but for sales and profits at its troubled Refrigerated Foods segment to improve. The company expects its Jennie-O Turkey Store to continue facing challenges, but the combined Thanksgiving and Christmas holiday season could generate higher sales later this year. The company expects full-year earnings of $1.93 to $2.03 per share, in line with analyst projections of $1.99 per share. Hormel currently trades at 17.6 times forward earnings with a 5-year PEG ratio of 1.8. The stock has a quarterly dividend yield of 1.70%, and has risen 35% over the past twelve months. Other News About HRL Hormel Profits Fall 4 Percent
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Published on Jun 11, 2013
By Leo Sun