On Mar 5, 2014, we issued an updated research report on
). The company reported strong results for the first quarter of
On a year-over-year basis, earnings increased 19% to 57 cents,
while revenues were up 6% to $2.2 billion. Margins also improved
year over year, led by higher revenues.
The company largely benefited from the acquisition of Skippy
peanut butter line. In the reported quarter, most of the business
segments recorded increased volumes due to the inclusion of
Skippy. Hormel is expected to further boost its revenues and
margins with the successful integration of the Chinese operations
Additionally, the company has been involved in plenty of
marketing and advertising initiatives to increase its brand
awareness. In the first quarter of fiscal 2014, roughly $36.1
million was spent on advertising campaigns compared with $24.7
million in the year-ago quarter. The investment in advertising is
expected to translate to higher revenues in the coming
However, fairly low restrictions on the entry and exit in the
meat and food products market exposes Hormel to stiff
competition, thereby challenging its revenue generation. In the
second and third quarters of fiscal 2014, the prices for raw
materials including pork, poultry and feed grains are expected to
rise, following the cold weather which will create a shortage of
national propane and natural gas.
Key Picks from the Sector
With a Zacks Rank #3 (Hold), Hormel has a market
capitalization of $12.5 billion. Some better-ranked stocks in the
industry worth a watch include
Tyson Foods, Inc.
The Hillshire Brands Co.
Sanderson Farms, Inc.
). While Tyson Foods sports a Zacks Rank #1 (Strong Buy),
Hillshire Brands and Sanderson Farms hold a Zacks Rank #2 (Buy)
HORMEL FOODS CP (HRL): Free Stock Analysis
HILLSHIRE BRAND (HSH): Free Stock Analysis
SANDERSON FARMS (SAFM): Free Stock Analysis
TYSON FOODS A (TSN): Free Stock Analysis
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