Hormel Foods (HRL) to Post Q2 Earnings: What's in the Cards?

Zacks Equity Research

Hormel Foods Corporation HRL is slated to report second-quarter fiscal 2019 results on May 23, before market opens. The company has outperformed the Zacks Consensus Estimate in three of the trailing four quarters with an average beat of 3.4%. Let’s see what’s in store for this renowned meat products company this time.

Which Way Are Estimates Heading?

The Zacks Consensus Estimate for the quarter under review is pegged at 45 cents reflecting growth of 2.3% from 44 cents reported in the year-ago quarter. Notably, the Zacks Consensus Estimate has gone down by a penny in the past 30 days.

The Zacks Consensus Estimate for revenues is $2,368 million, up 1.6% from $2,331 million reported in the year-ago quarter. We note that total revenues of the company increased 1.2% in the last-reported quarter.

Hormel Foods Corporation Price and EPS Surprise

Hormel Foods Corporation Price and EPS Surprise

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

Factors Setting the Tone

Soft turkey market conditions have kept Hormel Foods pressurized for quite some time now. Though the company is focused on reviving the turkey supply chain via increased investment in Jennie-O brand, management anticipates soft sales performance in the Jennie-O Turkey store in the to-be-reported quarter.

Additionally, the company expects elevated raw material costs in the second quarter owing to harsh weather conditions. Continued volatility owing to trade uncertainty associated with African swine fever and tariffs may aggravate input costs. This is likely to hurt the company’s profitability to some extent.

However, Hormel Foods’ food service business is performing well both domestically and in China. The company is on track with its innovation efforts and expects to expedite the process of delivering more unique products to the market. These apart, it expects certain categories such as refrigerated foods, grocery products, deli food service and its China business to remain sturdy, which bodes well for the second quarter.

Zacks Model

Our proven model doesn’t show that Hormel Foods is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). 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 #4 (Sell) and an Earnings ESP of -4.44%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that they have the right combination of elements to beat estimates.

Kimberly-Clark Corp. KMB has an Earnings ESP of +0.04% and a Zacks Rank #2.

Target Corp. TGT has an Earnings ESP of +0.70% and a Zacks Rank #2.

Costco Wholesale Corp. COST has an Earnings ESP of +1.65% and a Zacks Rank #3.

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