Stock gains stand 23.2%
As of November 14, Hormel Foods’ (HRL) stock price is up 23.2% year-to-date to $44.84.
Hormel Foods is slated to report its fourth-quarter results on November 20. Its reduced tax burden is likely to support its bottom-line performance. Analysts expect adjusted EPS growth of 18.7% to $0.47 for the fourth quarter. Hormel Foods is expected to report a 3.0% increase in sales to $2.57 billion in the fourth quarter.
Hormel Foods has missed sales estimates in all three quarters of fiscal 2018. Due to weakness in the hog market, management has slashed the company’s sales outlook for 2018. Sales are now expected at $9.4 billion–$9.6 billion. The earlier range was $9.7 billion–$10.1 billion.
On the other hand, Hormel Foods’ sales in the first, second, and third quarters of fiscal 2018 have increased 2.2%, 6.5%, and 6.9%, respectively, year-over-year. Acquisitions have supported the top line.
Hormel Foods expects to drive sales growth by expanding and accelerating its foodservice and becoming a broader food company. It’s looking to sell non-strategic assets, reduce volatility, and streamline its supply chain.
Under its vision 2020 strategy, Hormel Foods targets 5% and 10% growth in sales and EPS, respectively. It’s also working on driving sales from innovative products that launched in the last five years to 15% of overall sales by 2020.
The fast-growing deli business offers a good opportunity for top-line growth. While grocery consumers are looking for quick and healthy food options, deli is becoming an indispensable part of grocery stores. The Columbus Crafts acquisition is likely to boost sales of Hormel Foods’ deli division.