Yahoo Finance Why Hormel Foods’ Stock Has Risen 17% since Fiscal 4Q15 Earnings
Will Hormel Foods Deliver Strong Earnings Again in Fiscal 1Q16?
HRL has risen 17% since last quarter earnings
Hormel Foods (HRL) will report its financial results for fiscal 1Q16 on February 16 before the market opens. The stock has risen ~17% since its last earnings report. It reported its results for fiscal 4Q15 and fiscal 2015, which ended October 25, 2015, on November 24. The stock rose 3% with earnings beating estimates and delivering positive year-over-year growth.
HRL rose ~53% in 2015 due to high earnings growth, good cash flow from operations, and a solid financial position with reasonable debt levels. The stock rose faster last year, especially toward the end of 2015 when the avian influenza fears started dissipating.
The stock rose 3% when the company announced the proposed two-for-one stock split on November 25. Management mentioned that this split shows the company’s confidence in sales and earnings growth and acknowledges the company’s track record of providing shareholders with solid long-term returns. On January 27, the company announced the shareholder’s approval of the split. HRL didn’t react much that day but rose 2% the next day. It has been on a rising trend since then and has risen ~9%, as of yesterday, when it closed at $41.67. The stock has risen 6% so far in 2016 and has risen 6.5% in the last two months. The stock’s price movements on year-to-date and month-to-date bases are 5.3% and 3.6%, respectively. HRL has risen 4.2% on a trailing-five-day basis.
Peers’ stock performances
Hormel Foods’ peers in the industry include Tyson Foods (TSN), General Mills (GIS), and ConAgra Foods (CAG). Tyson Foods reported its fiscal 1Q16 results on February 5. The stock rose 10% following the earnings release.
General Mills and ConAgra Foods will report their fiscal 3Q16 results in March and April, respectively. TSN, GIS, and CAG closed at $61.50, $56.09, and $40.24, respectively, in yesterday’s trade. The Guggenheim S&P 500 Equal Weight Consumer Staples ETF (RHS) invests 2.6% of its portfolio in HRL and a total of 7.8% in the peers’ stocks. RHS closed yesterday’s trade at $113.80.
What to look for in this series
In the next part of this series, we’ll explore a quick recap of Hormel Foods’ fiscal 4Q15 performance, the company’s revenue trend, estimates, and what hurt its revenue in the previous quarter. We’ll also look at how the stock and its peers are trading compared to their moving averages and Hormel Foods’ guidance for fiscal 2016. Finally, we’ll see what Wall Street recommendations are for the stock before the earnings release.
Browse this series on Market Realist:
