What to look for when Hormel Foods (HRL) reports Q4 2023 earnings

Shares of Hormel Foods Corporation (NYSE: HRL) were down over 1% on Monday. The stock has dropped 29% year-to-date. The food company is set to report its fourth quarter 2023 earnings results on Wednesday, November 29, before market open. Here’s a look at what to expect from the earnings report:

Revenue

Hormel has guided for net sales of $3.1-3.6 billion for the fourth quarter of 2023. Analysts are projecting sales of $3.26 billion, which would represent a slight dip from $3.28 billion reported in the same period last year. In the third quarter of 2023, net sales dipped 1% to $3 billion.

Earnings

Hormel expects EPS in Q4 2023 to be down year-over-year due to weakness in the International and Retail segments. Analysts are predicting EPS of $0.44, which compares to EPS of $0.51 reported in the prior-year period. In Q3 2023, adjusted EPS was $0.40.

Points to note

On its last earnings call, Hormel said it expects modest volume growth for the fourth quarter of 2023, assuming growth from the Foodservice segment, recovery in turkey, and improved fill rates in key categories. In Q3, the company saw broadbased volume growth, driven by a recovery in turkey, strong demand for foodservice items, and growth in retail brands such as SPAM and Planters.

Last quarter, sales declined in the Retail and Foodservice segments hurt by lower pricing while International segment sales fell due to lower branded export sales and lower results in China. Hormel expects to see strength in Foodservice, weakness in International, and earnings pressure from heightened competition at Retail as it closes out fiscal year 2023.

Adjusted operating margin in Q3 was slightly up year-over-year, helped by demand for premium items in Foodservice and growth from the Retail SPAM and Black Label bacon portfolios. The company expects operating margins in Q4 to benefit from a seasonally strong sales mix and cost savings.