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Hormel (HRL) Q1 Earnings: What's in Store for the Stock?

Premium meat products company, Hormel Foods CorporationHRL is slated to report first-quarter fiscal 2017 (ended Jan, 2017) results on Feb 23 before the market opens.

In the last four quarters, the company has delivered a positive average earnings surprise of 6.30%.

Let's see how things are shaping up prior to this announcement.

Existing Scenario

On a quarter-to-date basis, Hormel Foods' shares yielded a return of 7.04% - outperforming 5.82% gain provided by the Zacks classified Food-Meat Products industry.

The company anticipates reporting higher revenues in the to-be-reported quarter, on the back of increased consumers' demand for the premium branded product categories, newly made buyouts and strategic marketing programs.

Also, the bottom-line performance is expected to be stronger on the back of higher revenues as well as lower input costs. Hormel Foods believes that market prices of inputs such as hog, pork, corn & soybean meal and grain would slip remarkably in fiscal 2017. Moreover, other optimistic factors, such as higher allowance of the U.S. Department of Agriculture for hog supply and lower prices of beef and chicken, are estimated to bring down costs and enhance the company's profitability moving ahead.

Over the last 60 days, the Zacks Consensus Estimate for this stock has been revised upward for both fiscal 2017 and 2018.

Hormel Foods Corporation Price and EPS Surprise

Hormel Foods Corporation Price and EPS Surprise | Hormel Foods Corporation Quote

However, still on the flip side, certain issues related to the market might weigh over the company's revenues and profitability for the quarter to be reported. For instance, stiff industry rivalry might reduce the company's market share, while a stronger U.S. dollar might significantly hurt overseas revenues and profitability for the quarter under review.

Earnings Whispers

Our proven model does not conclusively show that Hormel Foods is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as we will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks ESP: Hormel Foods currently has an Earnings ESP of -2.17%. This is because the Zacks Consensus Estimate of 46 cents comes above the Most Accurate estimate of 45 cents.

Zacks Rank: Hormel Foods presently sports a favorable Zacks Rank #1. However, when combined with a negative ESP, it makes surprise prediction difficult.

You can see the complete list of today's Zacks #1 Rank stocks here .

Note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some stocks within the industry that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Conagra Brands, Inc. CAG , with an Earnings ESP of +4.44% and a Zacks Rank #2.

Campbell Soup Company CPB , with an Earnings ESP of +5.97% and a Zacks Rank #2.

The Hershey Company HSY , with an Earnings ESP of +0.79% and a Zacks Rank #2.

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Hershey Company (The) (HSY): Free Stock Analysis Report

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ConAgra Foods Inc. (CAG): Free Stock Analysis Report

Campbell Soup Company (CPB): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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