The bird flu that has plagued Hormel Foods Corp.'s Jennie-O turkey business hasn't slowed the company's momentum.
Austin, Minn.-based Hormel beat analysts' third-quarter earnings expectations and upped its full-year profit guidance, as its other core businesses — from canned chili to Skippy peanut butter and fresh pork products — have been prospering.
The bird flu has sapped turkey supplies and reduced Jennie-O sales while increasing its costs. But in other Hormel divisions, input costs — particularly hog prices — have been falling, boosting profitability.
"It's another impressive quarter," said Brian Yarbrough, a stock analyst at Edward Jones. "When you think of avian flu and everything going on with Jennie-O, [Hormel] still put up 11 percent [adjusted] earnings growth."
Investors seemed happy as Hormel's shares closed Wednesday at $61.22, up 72 cents, or 1.2 percent, on a day when the broad market sunk.
Hormel posted net earnings of $146.9 million, or 54 cents per share, for the three months ended July 26. Excluding one-time costs, net earnings were 56 cents per share, 11 percent higher than a year ago and a penny above the consensus estimate from analysts polled by Thomson Reuters.
Sales trends for the third quarter were negative. Hormel's revenue amounted to $2.2 billion, down 4 percent from a year ago and shy of the $2.26 billion forecast by analysts. Jennie-O's woes contributed to that shortfall.
However, Hormel expects strong profitability into the fourth quarter. The company is raising its adjusted earnings guidance to a range of $2.57 to $2.63 per share, up from $2.50 to $2.60 per share.