In a February 20th release, Hormel Foods Corp (HRL) reported on Q1 of Fiscal 2020 ending January 26th 2020.
For the quarter, the company posted net income of $242.95 million on sales of $2.384 billion, and generated an EPS of $0.45. Comparable figures for the first quarter of Fiscal 2018 were net income of $241.52 million on revenue of $2.360 billion with an EPS of $0.44. Although Hormel exceeded consensus estimates on the top line, a one cent miss on EPS resulted in a 6.0 percent decrease in the price of HRL to $45.43 at market close on Thursday, February 20th.
Hormel Foods Corporation owns Jennie-O Turkey Store, and the results of this subsidiary reflect conditions in the turkey industry for the quarter. Sales for the Jennie-O division increased 2.8 percent from Q1 2019 to $330.13 million in Q1 2020. Profit for the division increased 1.7 percent to $38.55 million. Jennie-O represented 11.1 percent of company revenue but contributed 13.1 percent to operating profit. During the first quarter of 2019, Jennie-O represented 13.6 percent of sales and 11.8 percent of profit.
In commenting on results, Jim Snee, Chairman, President, and CEO stated “It is encouraging to see Jennie-O Turkey Store deliver a second consecutive quarter of volume, sales, and profit growth while continuing to gain back Jennie-O lean ground turkey distribution.”
Hormel maintained guidance for Fiscal 2020 noting expected strong performance from Jennie-O.
Hormel has traded over the past 52 weeks from $37.00 to $48.86 with a 50-day moving average of $46.58. The 12-month trailing operating profit margin was 12.1 percent with a profit margin of 10.3 percent. The company generated a return on assets of 8.7 percent and a return on equity of 16.9 percent. HRL has a market capitalization of $24.4 billion and trades with a forward P/E of 24.4.
The results of the Jennie-O Turkey Store subsidiary of Hormel auger well for the turkey industry, which has achieved higher unit revenue and presumably margins during the past five months, attributed, in part, to more conservative polt placement and increased exports.