Hormel Foods Q3 Earnings Miss Estimates, Sales Grow 4.6% Y/Y

Hormel Foods Corporation (HRL) reported its third-quarter fiscal 2025 results, wherein the top line beat the Zacks Consensus Estimate and showed year-over-year growth. The bottom line missed the consensus mark and declined year over year.

Hormel Foods posted adjusted earnings of 35 cents per share, which missed the Zacks Consensus Estimate of 41 cents. The bottom line decreased from 37 cents reported in the year-ago quarter.

Hormel Foods Corporation Price, Consensus and EPS Surprise

Hormel Foods Corporation price-consensus-eps-surprise-chart | Hormel Foods Corporation Quote

Net sales of $3,032.9 million increased 4.6% from $2,898.4 million reported in the year-ago quarter. However, the metric beat the consensus mark of $2,976 million. Volumes increased 2.7% in the reported quarter.

HRL’s Quarterly Results: Key Metrics & Insights

Hormel Foods’ gross profit was $487.3 million, down from $488.4 million reported in the year-ago quarter.

Adjusted selling, general and administrative expenses were $245.2 million for the quarter, an increase from $230.4 million in the year-ago period.

Adjusted operating income was $254.2 million, a decrease from $267.2 million in the same quarter last year. Adjusted operating margin was 8.4%, down from 9.2% reported in the year-ago quarter.

HRL Provides Q3 Revenue & Profit Insights by Segment

Net sales in the Retail unit increased 5.2% year over year to $1,858.4 million, with volumes gaining 4.8%, driven by strong contributions from the turkey portfolio, Planters snack nuts and the SPAM family of products. Additional growth came from Wholly guacamole, Hormel Black Label bacon, Hormel chili and Gatherings party trays. The consensus estimate for segment sales was pegged at $1,820 million.

Segment profit decreased 4.2%, due to higher input costs and increased selling, general and administrative expenses.

Net sales in the Foodservice segment increased 3.5% to $987 million, while the consensus mark was $967 million. The organic net sales rose 7% and volumes declined 4.4%. Growth was broad-based across the segment, driven by strong performance in the customized solutions business and the turkey portfolio. Branded products also delivered strong volume and sales gains.

Segment profit declined 1.2%, due to rising commodity input costs and margin pressures in non-core businesses. The Foodservice segment continued to benefit from an extensive range of solutions-based products, a strong direct-selling organization and a diversified channel presence.

Net sales in the International unit increased 5.8% year over year to $187.5 million, whereas volumes increased 8.4%, driven by growth in the China market and robust exports of SPAM luncheon meat. The consensus estimate for segment sales was pegged at $191 million.

Segment profit decreased 13.1%, due to competitive pressures in Brazil and weaker margins in pork offal.

Hormel Foods’ Financial Health Snapshot

This Zacks Rank #4 (Sell) company ended the quarter with cash and cash equivalents of $599.2 million and total long-term debt (excluding current maturities) of $2,850.2 million. In the fiscal third quarter, cash flow from operations was $156.7 million.

Hormel Foods prioritizes returning capital to its shareholders. The company returned nearly $159 million to its shareholders via dividends.

What to Expect From HRL in the Future?

Hormel Foods expects fourth quarter fiscal 2025 net sales to be between $3.15 billion and $3.25 billion, supported by expected organic net sales growth of 1% to 4%. The company anticipates adjusted earnings per share (EPS) to be in the range of 38 cents to 40 cents.

Hormel now anticipates fiscal 2025 EPS to be between $1.33 and $1.35, down from its previous range of $1.49 and $1.59. Adjusted EPS is expected to be between $1.43 and $1.45, revised from the earlier range of 1.58 and $1.68.

Hormel Foods targets capital expenditures to be $300 million, and expects depreciation and amortization expenses of approximately $260 million in fiscal 2025.

HRL stock has lost 4.4% in the past three months compared with the industry’s decline of 0.8%.

Stocks to Consider

Post Holdings, Inc. (POST) operates as a consumer-packaged goods holding company in the United States and internationally. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for Post Holdings’ current fiscal-year sales and earnings indicates growth of 3.1% and 10.9%, respectively, from the prior-year levels. POST delivered a trailing four-quarter earnings surprise of 21.4%, on average.

The Chefs' Warehouse, Inc. (CHEF) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. It currently carries a Zacks Rank of 2 (Buy). CHEF delivered a trailing four-quarter earnings surprise of 11.3%, on average.

The Zacks Consensus Estimate for The Chefs' Warehouse’s current fiscal-year sales and earnings indicates growth of 6.4% and 19.1%, respectively, from the prior-year levels.

Smithfield Foods, Inc. (SFD) produces packaged meats and fresh pork in the United States and internationally. It holds a Zacks Rank #2 at present. SFD delivered a trailing four-quarter earnings surprise of 6.6%, on average.

The Zacks Consensus Estimate for Smithfield Foods’ current fiscal-year sales and earnings indicates growth of 7.1% and 28.7%, respectively, from the prior-year levels.

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This article originally published on Zacks Investment Research (zacks.com).

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