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By David Gibbs

Hormel Foods Corp. (NYSE: HRL) produces a wide variety of meat and other food products headlined by the iconic SPAM-branded products but also including Jennie-O turkey, Dinty Moore and many others. HRL boasts a $6.6 billion market cap and a 2% dividend in addition to having beaten analyst estimates in eleven of the past twelve quarters.

Earnings: 4Q profit of $121.1 million ($0.90/share) vs. profit of $103.9 million ($0.77/share) in 4Q09. The current Q included an extra week.

Revenue: Up 23% YoY to $2.06 billion.

Actual vs. Wall St. Expectations: HRL beat the Street in terms of EPS and revenue as analysts had forecasted $0.79/share on $1.87 billion.

Notable Stats: Refrigerated foods, Hormel’s largest division, grew 22% YoY on expanding pork operating margins as volume grew 9%.

Profit generated by Jennie-O turkey products rose 90% YoY on a 19% increase in volume and lower grain costs.

Gross margin fell from 18.2% to 17.2%.

Did You Hear That? CEO Jeffrey Ettinger noted that HRL is, “embarking upon a program of strategic and modest price increases with a number of our products,” to deal with rising commodities prices.

Analysts at S&P maintained a Hold rating on shares while upping their 12-month target to $49 from $44, noting that they “attribute much of [HRL's] upside to the Refrigerated Foods pork business, and the extent of the profit rise from the Jennie-0-Turkey segment.”

Technicals: HRL possesses a wonderful chart, with successive periods of higher highs, lower lows and solid consolidations along the way. Shares are up 57% since their 10-week moving average broke upward through the 40-week line in May 2009 and are up 29% in 2010 alone. Shares may be a bit extended at current levels though, and a modest pullback towards the 10-week line may present a good buying opportunity.

Commentary: After growing annual EPS by 4.6% from 2009 to 2010, Hormel management expects to grow that number by 7.6% from 2010-2011. Shares’ 2% dividend makes its forward P/E of 14.6x appear more attractive than it otherwise would, as does the state of the economy. Record corporate profits have done little to assist much of the American middle class, and continued high unemployment numbers in addition to pressures from Washington to cut benefits are likely to perpetuate optimal sales conditions for producers of “trade-down” good like Hormel.

Disclosure: No holdings in HRL.

Source: Earnings Cheat Sheet: Hormel Beats Again