DA Davidson Cuts Price Target on Hormel Foods (HRL), Margins Look to Face Pressure in Q4
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Price: $24.13 -1.67%
Rating Summary:
3 Buy, 16 Hold, 7 Sell
Rating Trend:
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Today's Overall Ratings:
Up: 10 | Down: 18 | New: 20
Rating Summary:
3 Buy, 16 Hold, 7 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 10 | Down: 18 | New: 20
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DA Davidson is reaffirming its Underperform rating on shares of Hormel Foods (NYSE: HRL) while lowering its price target from $28 to $25 on them.
The firm reported its third quarter results with earnings coming in $0.01 above expectations, which was largely due to a tax rate of 29.6 percent as it contributed $0.03 to earnings. Sales also beat expectations as they rose 10.4 percent year-over-year to $1.9 billion.
The Grocery Products segment EBIT reached a 12.4 percent margin, well below the firms estimate of 15 percent. DA Davidson notes that Q3 sales grew 4.4 percent on strength in core SPAM brands and better contributions from Mary Kitchen Hash and the MegaMex joint venture.
An analyst at the firm comments, "HRL anticipates seasonally lower hog prices as well as lower EBIT margins in Fresh Pork, Refrigerated Foods and Jennie-O Turkey Store – some of its biggest segments. Corn costs will be a headwind and price elasticity is a concern as HRL continues to raise prices."
HRL raised its 2011 EPS guidance from $1.67-$1.73 to $1.70-$1.75 and set its Q4 guidance in the range of $0.39-$0.44.
The firm is currently forecasting EPS for Q4 and 2011 or $0.41 and $1.72 on $2.14 billion and $7.93 billion in sales. For 2012, DA Davidson estimates EPS of $1.70 on $8.25 billion in sales.
For more ratings news on Hormel Foods click here and for the rating history of Hormel Foods click here.
Shares of Hormel Foods closed at $28.44 yesterday.
The firm reported its third quarter results with earnings coming in $0.01 above expectations, which was largely due to a tax rate of 29.6 percent as it contributed $0.03 to earnings. Sales also beat expectations as they rose 10.4 percent year-over-year to $1.9 billion.
The Grocery Products segment EBIT reached a 12.4 percent margin, well below the firms estimate of 15 percent. DA Davidson notes that Q3 sales grew 4.4 percent on strength in core SPAM brands and better contributions from Mary Kitchen Hash and the MegaMex joint venture.
An analyst at the firm comments, "HRL anticipates seasonally lower hog prices as well as lower EBIT margins in Fresh Pork, Refrigerated Foods and Jennie-O Turkey Store – some of its biggest segments. Corn costs will be a headwind and price elasticity is a concern as HRL continues to raise prices."
HRL raised its 2011 EPS guidance from $1.67-$1.73 to $1.70-$1.75 and set its Q4 guidance in the range of $0.39-$0.44.
The firm is currently forecasting EPS for Q4 and 2011 or $0.41 and $1.72 on $2.14 billion and $7.93 billion in sales. For 2012, DA Davidson estimates EPS of $1.70 on $8.25 billion in sales.
For more ratings news on Hormel Foods click here and for the rating history of Hormel Foods click here.
Shares of Hormel Foods closed at $28.44 yesterday.
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