On Nov 29, Zacks Investment Research upgraded Hormel Foods Corporation HRL to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold). We perceive that the upside is primarily stemmed by the company’s robust fourth-quarter fiscal 2017 results. Going by the Zacks model, companies holding a bullish Zacks Rank of 2 have higher chances of performing better than the broader market over the next two to three months.
Last month, shares of the company have returned 13%, outperforming the industry’s 11.2% gain.
Existing Scenario
Hormel Foods reported better-than-expected fourth-quarter fiscal 2017 (ended October). Quarterly earnings and revenues both surpassed the respective Zacks Consensus Estimates.
Sturdier demand for on-trend branded products such as SKIPPY and SPAM would likely boost Hormel Foods’ revenues going forward. Also, a diversified product portfolio and initiatives to expand production capacity will likely prove advantageous in the quarters ahead. Per the company, consolidation of its Specialty Foods segment into the Grocery Products segment will assist in delivering revenue synergies in the long term.
The company also intends to boost its competency on the back of latest business acquisitions. Earlier in August, the company acquired the Fontanini brand from Capitol Wholesale Meats, Inc. and the Ceratti brand from Cidade do Sol. While the Fontanini buyout has strengthened the company's
Burke Pizza toppings and food service businesses, Ceratti acquisition has solidified the company's South American business footprint. Notably, the newest Columbus Manufacturing, Inc. acquisition (announced in October) will likely fortify the company's deli businesses going forward and is expected to drive its earnings from fiscal 2018 onward.
Hormel Foods is even committed toward its shareholders and hopes to augment their returns through lucrative dividends. On Nov 21, 2017, the company announced a 10% hike in annual dividend rate, marking the 52nd successive yearly upsurge in its payouts.
Moreover, the company tries to improve its brand status by conducting several social welfare maximizing activities. In sync with this strategy, the company finances various donation programs that address social issues including hunger relief and education. Efficient brand promotion drives the buyers' loyalty toward the company's brands and products.
Other Stocks to Consider
Some other top-ranked stocks within the same space are listed below:
The Boston Beer Company, Inc. SAM flaunts a Zacks Rank #1 (Strong Buy) and delivered an average positive earnings surprise of 63.35% for the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.