Hormel Foods Corp. (HRL) recently hit a new all-time high after jumping higher on a 14% Q3 earnings surprise. With an average earnings surprise of 13% over the last four quarters and rising estimates, this Zacks #1 rank stock offers a hearty serving of momentum.
Company Description
Hormel Foods Corp., together with its subsidiaries, makes and sells various food products worldwide. The company was founded in 1891 and has a market cap of $6.55 billion.
Even though HRL has been grinding steadily higher for most of the year, shares recently jumped to a new all-time high after posting strong Q3 results in late November that handily beat expectations.
Third-Quarter Results
Revenue for the period was up 23% from last year to $2.1 billion. Earnings also looked good, coming in at 90 cents, 14% ahead of the Zacks Consensus Estimate, where Hormel now has an average earnings surprise of 13% over the last four quarters.
The company’s biggest segment, refrigerated foods, also saw the biggest gains, with sales up 26% from last year to $1.1 billion. The segment also saw its operating profit increase 22% to $86 million.
Strong Balance Sheet
Hormel was also busy strengthening its balance sheet during the quarter, with cash and equivalents up $83 million from last year while it eliminated its total debt load of $350 million from just last quarter.
Estimates
We saw some decent movement in estimates on the good quarter, with the current year adding 13 cents to $3.18. The next-year estimate is pegged at $3.39, a solid 7% growth projection.
But in spite of the recent gains, the valuation picture still looks solid, with a forward P/E of 15X against the industry average of 16X.
2-Year Chart
Although HRL has been trending higher for most of the last 18 months, shares recently surged higher on the good quarter to hit a new all-time high at $49.75. Look for support from the long-term trend line on any signs of weakness, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
HORMEL FOODS CP (HRL): Free Stock Analysis Report
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