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Factors Likely to Influence Hormel Foods' (HRL) Q3 Earnings

Zacks Equity Research
·3 min read

Hormel Foods Corporation HRL is slated to release third-quarter fiscal 2020 results on Aug 25. This meat product company has a trailing four-quarter negative earnings surprise of 0.3%, on average.

The Zacks Consensus Estimate for the fiscal third-quarter earnings has been unchanged in the past 30 days at 33 cents per share. However, this suggests a decline of 10.8% from the year-ago quarter’s reported figure. The consensus mark for revenues is $2.31 billion, which indicates an increase of nearly 1% from the figure reported in the year-ago quarter.

Key Factors to Note

Hormel Foods has been benefiting from the rising demand amid the coronavirus outbreak-led pantry loading and stay-at-home trends. Strength in the company’s popular products like Hormel Black Label bacon, Applegate natural and organic products, Columbus grab-and-go charcuterie and Hormel pepperoni, and focus on innovations have been yielding results.

Hormel Foods Corporation Price and EPS Surprise

 

Hormel Foods Corporation Price and EPS Surprise
Hormel Foods Corporation Price and EPS Surprise

Hormel Foods Corporation price-eps-surprise | Hormel Foods Corporation Quote

The company has been committed to making advertisement investments to support the growth of its brands. Additionally, it has been focusing on launching products to meet consumers’ preferences. Moreover, the company’s focus on strengthening business through acquisitions has been a key driver. Notably, Hormel Foods’ Refrigerated Foods category has been steadily growing on the back of a strong brand portfolio and effective strategies.

However, higher SG&A expenses along with escalated supply-chain costs, stemming from COVID-19 woes, have been putting pressure on earnings in recent months. On its last reported quarter’s earnings call, management predicted incurring costs worth another $60-$80 million in the second half of fiscal 2020, most of which are likely to be weighted in the fiscal third quarter. Also, higher pork prices along with weakness in the Refrigerated Foods segment have been headwinds.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Hormel Foods this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Hormel Foods carries a Zacks Rank #3 and Earnings ESP of +8.27%.

Other Stocks With Favorable Combination

Here are some other companies that you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat.

Ollies Bargain Outlet Holdings, Inc. OLLI currently has an Earnings ESP of +8.90% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Campbell Soup Company CPB has an Earnings ESP of +0.24% and a Zacks Rank #2.

The Hain Celestial Group, Inc. HAIN currently has an Earnings ESP of +2.94% and a Zacks Rank #3.

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The Hain Celestial Group, Inc. (HAIN) : Free Stock Analysis Report
 
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