Shelf-Stable Food Stocks Q3 Teardown: Hormel Foods (NYSE:HRL) Vs The Rest
The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how shelf-stable food stocks fared in Q3, starting with Hormel Foods (NYSE:HRL).
As America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.
The 20 shelf-stable food stocks we track reported a mixed Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 5.7% below.
While some shelf-stable food stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4.8% since the latest earnings results.
Hormel Foods (NYSE:HRL)
Best known for its SPAM brand, Hormel (NYSE:HRL) is a packaged foods company with products that span meat, poultry, shelf-stable foods, and spreads.
Hormel Foods reported revenues of $3.14 billion, down 1.9% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with full-year revenue guidance missing analysts’ expectations and a miss of analysts’ EBITDA estimates.
Hormel Foods Total Revenue
Unsurprisingly, the stock is down 1.4% since reporting and currently trades at $31.37.
Best known for its portfolio of powerhouse breakfast cereal brands, General Mills (NYSE:GIS) is a packaged foods company that has also made a mark in cereals, baking products, and snacks.
General Mills reported revenues of $5.24 billion, up 2% year on year, outperforming analysts’ expectations by 1.9%. The business had a very strong quarter with a solid beat of analysts’ EBITDA and gross margin estimates.
General Mills Total Revenue
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 3.7% since reporting. It currently trades at $63.50.
Best known for its SuperPretzel soft pretzels and ICEE frozen drinks, J&J Snack Foods (NASDAQ:JJSF) produces a range of snacks and beverages and distributes them primarily to supermarket and food service customers.
J&J Snack Foods reported revenues of $426.8 million, down 3.9% year on year, in line with analysts’ expectations. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and gross margin estimates.
As expected, the stock is down 10.5% since the results and currently trades at $155.13.
Best known for its Atkins brand that was inspired by the popular diet of the same name, Simply Good Foods (NASDAQ:SMPL) is a packaged food company whose offerings help customers achieve their healthy eating or weight loss goals.
Simply Good Foods reported revenues of $375.7 million, up 17.2% year on year. This print topped analysts’ expectations by 0.6%. Overall, it was a strong quarter as it also logged an impressive beat of analysts’ EBITDA estimates.
The stock is up 20.6% since reporting and currently trades at $38.88.
Whether it be packaged crackers, broths, or beverages, Treehouse Foods (NYSE:THS) produces a wide range of private-label foods for grocery and food service customers.
TreeHouse Foods reported revenues of $854.4 million, down 1% year on year. This result came in 2.9% below analysts' expectations. It was a softer quarter as it also produced a significant miss of analysts’ organic revenue and gross margin estimates.
The stock is down 5.5% since reporting and currently trades at $35.13.
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
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