Consumer brand meat and food products company,
Hormel Foods Corporation
) is set to report fiscal second quarter 2013 results on May 23.
Last quarter it posted a 2.04% negative surprise. Let's see how
things are shaping up for this announcement.
Growth Factors this Past Quarter
Hormel has been experiencing a rise in most of its major
segments, pushing up its total revenue. Last reported quarter, it
saw a year-over-year revenue rise of 3.8%, led by a gain in four
of its five business segments. Also, management expects Grocery
Products, Specialty Foods and All Other segments to continue
prospering in the coming quarters. Refrigerated Foods segment,
which was undergoing problems in the previous quarters, is
expected to report better results in the current quarter.
However, the increasing cost of raw materials, leading to a
decline in the company's margins cannot be overlooked. Management
also feels that Jennie-O Turkey will continue to face headwinds
in a few quarters ahead.
Our proven model does not conclusively show that Hormel is
likely to beat earnings this quarter. This is because a stock
needs to have both a positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here as you will see below.
Neutral Zacks ESP:
This is because the Most Accurate Estimate stands at 48 cents
while the Zacks Consensus Estimate is equal at 48 cents. That is,
there is a difference of 0.00%.
Zacks Rank #2 (Buy):
Hormel's Zacks Rank #2 (Buy) 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 some other consumer goods companies you may want to
consider as our model shows they have the right combination of
elements to post an earnings beat this quarter:
Flowers Foods, Inc.
), Earnings ESP of 9.38% and a Zacks Rank #1 (Strong Buy)
SodaStream International Ltd.
), Earnings ESP of 1.72% and a Zacks Rank #2 (Buy)
Chiquita Brands International
), Earnings ESP of 10.87% and a Zacks Rank #3 (Hold).
CHIQUITA BR INT (CQB): Free Stock Analysis
FLOWERS FOODS (FLO): Free Stock Analysis
HORMEL FOODS CP (HRL): Free Stock Analysis
SODASTREAM INTL (SODA): Free Stock Analysis
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