After reporting a year-over-year increase in earnings for
fiscal second quarter of 2013, food products company,
Hormel Foods Corporation
) expects its performance in the second half of the year to drop.
Hormel recently reduced its earnings per share guidance for
fiscal 2013 to the range of $1.88-$1.96 against $1.93-$2.03
expected earlier. A slowdown in the pork business, lower retail
sales in the Refrigerated Foods segment along with higher input
costs are to be blamed for the expected decline.
The Refrigerated Foods segment consists primarily of the
processing, marketing and sale of branded and unbranded pork and
beef products for retail, food service and fresh product
customers. The pork business has been under pressure for the past
few quarters. Sales in this segment dropped 2.0% year over year
to $1.0 billion in the fiscal second quarter of 2013 due to lower
revenue generation from the pork business coupled with higher
grain costs. However, management expected an improvement in the
same in the second half of fiscal 2013.
However, Hormel expects sales improvement in other segments to
partially offset the sales decline in the Refrigerated Foods
segment. The recent acquisition of the Skippy peanut butter line
is expected to contribute significantly to revenue generation in
the coming quarters, along with Grocery Products and
International & Other segments.
Hormel intends to elaborate on the new guidance during its
Investor Day, scheduled for Jun 26, 2013. The stock currently
carries a Zacks Rank #4 (Sell). However, other stocks that are
performing well and are worth a watch include
Pilgrim's Pride Corporation
Sanderson Farms, Inc.
B&G Foods Inc.
), each carrying a Zacks Rank #1 (Strong Buy).
B&G FOODS CL-A (BGS): Free Stock Analysis
HORMEL FOODS CP (HRL): Free Stock Analysis
PILGRIMS PRIDE (PPC): Free Stock Analysis
SANDERSON FARMS (SAFM): Free Stock Analysis
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