Earnings preview: Key products to drive Hormel’s Q1 growth

Hormel Foods Corporation (HRL) is scheduled to report its earnings results for the first quarter of 2019 on Thursday, February 21, before the opening bell. Analysts are anticipating earnings of $0.43 per share on revenues of $2.4 billion. This would reflect a 2.9% revenue growth and a 2.3% earnings decline year-over-year.

For the first quarter, Hormel’s key products are expected to drive revenues, with all segments likely to see sales increases. The company is also expected to benefit from new product launches and the brands it has acquired over the years. However, higher costs are likely to hinder earnings growth in the first quarter.

In the fourth quarter of 2018, Hormel topped earnings estimates but fell short on revenues, hurting the stock at the time. Net sales inched up by 1% to $2.5 billion while adjusted earnings grew 24% to $0.51 per share.

Last quarter, sales and volume grew in the Refrigerated Foods as well as the International & Other segments, helped by strength in branded products along with benefits from acquisitions. Sales and volume decreased in the Grocery Products and Jennie O Turkey Store segments, due to declines in the contract manufacturing business.

For full-year 2019, Hormel had provided guidance for sales of $9.70 billion to $10.20 billion and EPS of $1.77 to $1.91. The company expects top brands like Wholly Guacamole, SPAM, Applegate and Jennie-O to drive growth in 2019.

Over the past 52 weeks, the stock has gained 25%, and has been rated Strong Buy and Hold by most analysts.

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