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Hormel Foods (HRL) to Report Q4 Earnings: What's in Store?

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Zacks Equity Research
·4 min read
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Hormel Foods Corporation HRL is likely to register an improvement in the top line, when it reports fourth-quarter fiscal 2020 numbers on Nov 24. The Zacks Consensus Estimate for revenues is pegged at $2.60 billion, which indicates an increase of 3.8% from the prior-year quarter’s reported figure.

However, the company’s bottom line is expected to decline year over year. The Zacks Consensus Estimate for fiscal fourth-quarter earnings has remained unchanged at 45 cents per share in the past 30 days. This suggests a decline of 4.3% from the year-ago quarter’s reported figure. The meat product company has a trailing four-quarter earnings surprise of 1.4%, on average. In the last reported quarter, it delivered an earnings surprise of 12.1%.

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


Key Factors to Note

Hormel Foods is benefiting from rising demand in the retail channel amid the coronavirus pandemic. In its fiscal third-quarter earnings call, management stated that it expects strength in retail business to be mirrored in fiscal fourth quarter as well. Apart from these, strength in the company’s popular products like Bacon 1, Fire Braised, Austin Blues, CafeH, Natural Choice, Burke, Fontanini, and Sadler's Smokehouse, and focus on innovations are noteworthy. Moreover, the company’s efforts to strengthen business through acquisitions have been a key driver.

However, Hormel Foods is seeing declines in its foodservice business amid the pandemic. This could be attributed to reduced demand from restaurants, hotels, distributors and various other foodservice venues in the wake of COVID-19 induced social distancing. During its last earnings call, management noted that although its foodservice business saw a rebound, it remains below year-ago levels. The company stated that it expects the trend to persist in the fiscal fourth quarter.

Also, factors like limited availability of labor, manufacturing inefficiencies (related to pandemic-induced safety measures) and unseasonably reduced inventory levels are likely to have hindered its ability to cater to the rising demand for some products in the to-be-reported quarter. Apart from these, escalated costs associated with COVID-19 are putting pressure on the company’s performance. Management anticipates total additional supply-chain costs of $80-$100 million for fiscal 2020 and $20-$40 million for the fiscal fourth quarter.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict 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 an Earnings ESP of -3.59%.

Stocks With Favorable Combinations

Here are some 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.

Casey’s CASY currently has an Earnings ESP of +3.32% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Best Buy BBY currently has an Earnings ESP of +14.92% and carries a Zacks Rank #2.

DICK’S Sporting Goods DKS currently has an Earnings ESP of +16.18% and has a Zacks Rank of 3.

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