Hormel Foods to Release Q1 Earnings: Should You Expect a Beat?

Core Viewpoint - Hormel Foods Corporation (HRL) is expected to report a decline in both revenue and earnings for the first quarter of fiscal 2025, with earnings estimated at 38 cents per share, reflecting a 7.3% decrease year-over-year, and revenues projected at $2.9 billion, indicating a nearly 2$2.9 billion [1]. - Hormel Foods has a trailing four-quarter earnings surprise average of 7.4% [1]. Cost and Operational Challenges - The company has been facing rising selling, general and administrative (SG&A) expenses, attributed to increased employee-related costs and expenses related to its Transform and Modernize (T&M) initiative [3]. - Management anticipates further increases in SG&A expenses and advertising spending for fiscal 2025, which may negatively impact profitability [3]. - A production disruption at the Planters facility in Suffolk, VA, has affected the company's ability to meet demand for its snack nuts portfolio, leading to expected near-term commercial impacts and increased costs [4]. Earnings Impact - Hormel Foods expects a negative earnings per share (EPS) impact of 4-5 cents in the upcoming quarter, primarily due to lower year-over-year whole bird prices and the production disruption in Suffolk [4]. Strategic Initiatives - Despite the challenges, Hormel Foods remains committed to innovation, which has strengthened its market position [5]. - The T&M initiative aims to enhance production efficiency and supply-chain management, while growing demand for Foodservice products has provided some relief [5]. Earnings Prediction - The company's earnings model suggests a potential earnings beat, supported by a positive Earnings ESP and a Zacks Rank of 3 (Hold) [6].