Hormel Foods stock
Hormel Foods (HRL) stock has been subdued this year, rising just 3.1% as of July 12. However, since its last earnings report on May 24, Hormel Foods stock has risen 6.1%.
What lies ahead?
Hormel Foods expects acquisitions to boost its top line. In 2017, the company acquired Fontanini, Columbus Craft Meats, and Ceratti for about $1.4 billion. Columbus Crafts is an accretive acquisition as the company looks to expand in the fast-growing deli market. Hormel Foods has a created a new deli division within its refrigerated products segment by integrating its deli businesses. The company is also focused on product innovations.
The company expects its grocery segment to return to growth in the second half of fiscal 2018, given the strength in its core portfolio. However, its Jennie-O Turkey Store segment continues to struggle. The continued oversupply of turkeys has resulted in lower prices, impacting sales. However, it expects these issues to soon subside, helping the segment in the first half of fiscal 2019.
Also, the company’s per-unit freight costs rose by double digits in the second quarter of fiscal 2018, due to higher diesel fuel surcharges. Management expects these freight costs to continue to impact profitability in the second half of fiscal 2018 and in fiscal 2019. Advertising expenses are expected to rise 20% in fiscal 2018. In the next article, we’ll look at Hormel Foods’ sales and expectations.