Analysts are upbeat

Hormel Foods (HRL) is scheduled to report its third fiscal quarter results on August 23. Analysts expect the company to report sales of $2.38 billion, which reflects 7.8% growth on a YoY (year-over-year) basis. The growth marks an improvement over the decline of 4.1% witnessed in the third fiscal quarter of 2017.

Hormel Foods’ Q3 2018 Sales Are Projected to Grow ~8%

Strength in Skippy peanut butter sales and acquisitions (Columbus Craft Meats and Fontanini) will likely continue to boost Hormel Foods’ top line. However, turkey oversupply could keep the Jennie-O Turkey Store segment under pressure. Hormel Foods is focused on product innovation to meet consumers’ growing preferences for healthier food options. The Grocery segment is expected to benefit from the company’s core portfolio of brands. The Refrigerated segment will likely benefit from higher sales of value-added products.

Management hasn’t provided a sales outlook for the third quarter. For fiscal 2018, the sales are forecast to be $9.7 billion–$10.1 billion.

Past performance

Hormel Foods’ sales in the second fiscal quarter of $2.33 billion missed analysts’ consensus estimate of $2.36 billion. However, the sales rose 6.5% on a YoY basis. The acquisitions and Skippy peanut butter’s strong performance were major growth drivers. Organic sales were flat on a YoY basis.

Segment wise, the company’s Refrigerated segment’s sales rose 13.6%, while the International segment delivered sales growth of 22.1% due to the good performance in China.

Due to weakness in the CytoSport portfolio, the Grocery Products segment’s sales fell 1.4%. Weakness continued in the Jennie-O Turkey Store segment where sales fell 4.2%.

Analysts’ projections for Hormel’s peers

For Conagra (CAG), analysts expect sales to increase 2.5% to $1.85 billion for in the first fiscal quarter of 2019. Conagra’s management expects sales to increase 2.0%–2.5% in the first fiscal quarter of 2019. Incremental sales from recent acquisitions will likely add to the top line.

For Campbell Soup (CPB), analysts expect the sales to increase 35.0% to $2.25 billion for in the fourth fiscal quarter of 2018. Overhauling the brand portfolio and several acquisitions will likely drive the sales. However, weakness in the soups and beverages business is still a concern.

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