Consumer-branded meat and food products company,
Hormel Foods Corporation
) is set to report fiscal fourth-quarter 2013 results before the
opening bellc on Nov 26. In the last quarter, it delivered 4.5%
negative earnings surprise. Let's see how things are shaping up
for this announcement.
Factors to Consider
In the third quarter of fiscal 2013, Hormel reported improved
year-over-year results, with earnings per share of 42 cents, a
penny higher than the year-ago quarter. Total revenue in the
quarter increased 7.5% year over year to $2,159.5 million, on the
back of strength across all the segments. The company's
acquisition of the Skippy peanut butter line was also a major
reason for the growth.
Moreover, Hormel experienced a rise in operating income for
all its segments, except the Refrigerated Foods segment, due to a
higher pork input costs. The increasing costs as well as reduced
supply of raw materials like pork, poultry and feed grains have
been impacting the company's margins for quite some time.
Management expects raw materials costs to impact
fourth-quarter margins as well. However, the company is
optimistic of higher sales from the Jennie-O Turkey Store segment
over the coming quarters.
Our proven model does not conclusively show that Hormel is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive
and a Zacks Rank of #1, #2 or #3 for this to happen. That is not
the case here as we see below.
The Most Accurate Estimate stands at 54 cents, flat with the
Zacks Consensus Estimate.
Hormel's Zacks Rank #3 (Hold) when combined with a neutral ESP
makes a surprise prediction difficult. We caution against stocks
with Zacks #4 and #5 Ranks (Sell rated stocks) going into the
earnings announcement, especially when the company is seeing a
negative estimate revision momentum.
Other Stocks to Consider
Here are other companies you may want to consider as our model
shows they have the right combination of elements to post an
earnings beat this quarter:
Omega Protein Corporation
), Earnings ESP of +16.00% and a Zacks Rank #1 (Strong Buy)
United Natural Foods, Inc.
), Earnings ESP of +3.70% and a Zacks Rank #2 (Buy).
Campbell Soup Company
), Earnings ESP of +1.39% and a Zacks Rank #3 (Hold).
CAMPBELL SOUP (CPB): Free Stock Analysis
HORMEL FOODS CP (HRL): Free Stock Analysis
OMEGA PROTEIN (OME): Free Stock Analysis
UTD NATURAL FDS (UNFI): Free Stock Analysis
To read this article on Zacks.com click here.