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Hormel Foods Corporation (HRL) Reports Its Q/4-15 Number - Provides 2016 Guidance

Nov. 24, 2015 11:23 AM ETHRL
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Hormel Foods Corporation (HRL) reported non-GAAP adjusted diluted EPS of $0.74, up 17% from $0.63 per share reported in the same quarter last year. HRL set their fiscal 2016 earnings guidance range at $2.85 to $2.95 per share.

The Yahoo projections:

Earnings Est Current Qtr.
Oct 15		 Next Qtr.
Jan 16		 Current Year
Oct 15		 Next Year
Oct 16
Avg. Estimate 0.69 0.66 2.60 2.83
No. of Analysts 8.00 6.00 8.00 9.00
Low Estimate 0.67 0.64 2.53 2.75
High Estimate 0.75 0.69 2.65 2.88
Year Ago EPS 0.63 0.69 2.23 2.60

I would project that over the next week, the 2016 projection will rise to $2.91 or $2.92.

HRL has significantly outperformed my coverage universe of large-cap consumer stables this year. It has done so while its P/E ratio has gone from a small premium to a large-ish premium. I would conclude it is a suboptimal time to buy HRL. On the other hand - it is rarely a bad time to buy a good stock - and HRL has been and continues to be a good stock.

A gathered the pricing data at 11:10 AM at 11-24-15:

Large-Cap Consumer Staples 11/24/15

The Q4-15 dividend is used for yield calculations. The second Dividend/EPS ratio has the 2016 EPS projection as the denominator. The change in the target, EPS and target is the percentage change in the consensus 2015 projection that has happened since the beginning of 2015. "Div 1 yr" measures the change in the dividend since Q4-14. "Div 5 yr" measures the average change in the dividend since Q4-10.

12-31-14 11-24 Div Current Div/ Div/ Percent Change
Company Price Price /Quarter Yield EPS15 EPS16 Price Pr+Div EPS15 Target Div 1yr Div 5yr
Archer-Daniels (ADM) 52.00 36.04 0.280 3.11 41% 36% -30.69 -29.08 -23.12 -16.82 16.67 17.33
Campbell (CPB) 44.00 51.13 0.312 2.44 51% 48% 16.20 19.04 0.00 16.09 0.00 1.52
Coke (KO) 42.22 43.10 0.330 3.06 66% 64% 2.08 4.43 -2.45 2.27 8.20 10.00
ConAgra (CAG) 36.28 41.06 0.250 2.44 46% 45% 13.18 15.24 -3.54 30.95 0.00 1.74
Colgate (CL) 69.19 66.58 0.380 2.28 54% 51% -3.77 -1.58 -9.97 0.49 5.56 8.68
Ingredion (INGR) 84.84 97.37 0.450 1.85 31% 28% 14.77 16.89 -2.83 21.23 7.14 44.29
Clorox (CLX) 104.21 124.82 0.770 2.47 67% 63% 19.78 22.73 2.70 30.62 4.05 8.00
Flowers (FLO) 19.19 23.55 0.145 2.46 59% 53% 22.72 24.99 1.02 12.81 20.83 12.62
General Mills (GIS) 53.33 57.62 0.440 3.05 62% 60% 8.04 11.34 1.06 12.94 7.32 11.43
Hershey (HSY) 103.93 85.84 0.583 2.72 57% 53% -17.41 -15.72 -7.87 -9.88 8.97 16.44
Hormel 52.10 70.49 0.250 1.42 38% 35% 35.30 37.22 2.36 17.89 25.00 27.62
Kellogg (K) 65.44 67.75 0.500 2.95 57% 54% 3.53 5.82 -13.83 10.57 2.04 4.69
Kimberly-Clark (KMB) 115.54 120.79 0.880 2.91 61% 57% 4.54 7.59 -4.64 9.48 4.76 6.67
Lancaster (LANC) 93.64 113.96 0.460 1.61 50% 44% 21.70 23.17 -3.69 18.95 0.00 7.88
McCormick (MKC) 74.30 85.25 0.400 1.88 46% 43% 14.74 16.89 -3.33 15.00 8.11 8.57
Pepsi (PEP) 94.56 100.48 0.703 2.80 62% 58% 6.26 8.49 -6.94 3.64 7.25 9.27
Procter&Gamble (PG) 91.09 76.01 0.663 3.49 66% 71% -16.56 -13.64 -7.37 -9.29 3.00 7.48
JM Smucker (SJM) 100.98 120.90 0.670 2.22 50% 46% 19.73 21.72 -3.06 21.32 4.69 13.50
Average 2.51 54% 51% 7.45 9.75 -4.75 10.46 7.42 12.10
The SPY or S&P 500 EFT is up 0.99% year to date. - and with unreinvested dividends is up 2.45% year to date.
The KXI or Consumer Staples ETF is up 4.10% year to date - and with unreinvested dividends is up 5.38%.
With the 10 Treasury at 2.21% and the sector average yield on the Q4 dividend at 2.51% - the spread is 20 basis points.
* The change in the dividend is for the last twelve months and not year to date.

Price/Earnings Ratios 11-24
2017 Projections are from NASDAQ. INGR lacked a '17 projection. I used 8% growth on '16 projection to generate a number for INGR.

EPS / Share % EPS Growth Price/EPS Current Fiscal Year Year
Co. 2013 2014 2015 2016 2017 13-14 14-15 15-16 16-17 2015 2016 2017 High Low Range End
ADM 2.33 3.20 2.76 3.13 3.39 37.34 -13.75 13.41 8.31 13.06 11.51 10.63 3.24 2.91 11.96% Dec
CPB 2.64 2.53 2.46 2.59 2.75 -4.17 -2.77 5.28 6.18 20.78 19.74 18.59 2.77 2.46 12.60% July
KO 2.08 2.04 1.99 2.07 2.29 -1.92 -2.45 4.02 10.63 21.66 20.82 18.82 2.07 1.96 5.53% Dec
CAG 2.16 2.17 2.18 2.23 2.39 0.46 0.46 2.29 7.17 18.83 18.41 17.18 2.34 2.15 8.72% May
CL 2.84 2.93 2.80 2.97 3.39 3.17 -4.44 6.07 14.14 23.78 22.42 19.64 2.95 2.66 10.36% Dec
INGR 5.05 5.20 5.84 6.36 6.79 2.97 12.31 8.90 6.76 16.67 15.31 14.34 5.80 5.65 2.57% Dec
CLX 4.31 4.26 4.57 4.87 5.20 -1.16 7.28 6.56 6.78 27.31 25.63 24.00 4.95 4.74 4.60% June
FLO 0.91 0.88 0.99 1.09 1.20 -3.30 12.50 10.10 10.09 23.79 21.61 19.63 1.01 0.97 4.04% Dec
GIS 2.69 2.82 2.86 2.93 3.15 4.83 1.42 2.45 7.51 20.15 19.67 18.29 3.08 2.88 6.99% May
HSY 3.72 3.98 4.10 4.43 4.95 6.99 3.02 8.05 11.74 20.94 19.38 17.34 4.18 4.08 2.44% Dec
HRL 1.97 2.23 2.60 2.83 2.99 13.20 16.59 8.85 5.65 27.11 24.91 23.58 2.62 2.60 0.77% Oct
K 3.77 3.81 3.49 3.70 3.96 1.06 -8.40 6.02 7.03 19.41 18.31 17.11 3.60 3.48 3.44% Dec
KMB 5.77 5.51 5.76 6.17 6.88 -4.51 4.54 7.12 11.51 20.97 19.58 17.56 5.84 5.63 3.65% Dec
LANC 3.98 3.69 3.65 4.20 4.49 -7.29 -1.08 15.07 6.90 31.22 27.13 25.38 4.18 4.05 3.56% June
MKC 3.13 3.37 3.48 3.75 4.20 7.67 3.26 7.76 12.00 24.50 22.73 20.30 3.55 3.45 2.87% Nov
PEP 4.37 4.63 4.56 4.84 5.41 5.95 -1.51 6.14 11.78 22.04 20.76 18.57 4.60 4.35 5.48% Dec
PG 4.05 4.09 4.02 3.76 4.24 0.99 -1.71 -6.47 12.77 18.91 20.22 17.93 4.07 3.69 9.45% June
SJM 5.37 5.64 5.38 5.78 6.41 5.03 -4.61 7.43 10.90 22.47 20.92 18.86 5.80 5.71 1.67% Apr
Average 1.15 6.61 9.32 21.87 20.50 18.76

Update of 11-25-15

I would have projected that the analysts would be too busy with office parties to update their projections this week. But the consensus projection for 2016 has already begun to move from the $2.83 that existed before the earnings release.

Earnings Est Current Qtr.
Jan 16		 Next Qtr.
Apr 16		 Current Year
Oct 16		 Next Year
Oct 17
Avg. Estimate 0.68 0.68 2.87 3.11
No. of Analysts 6.00 6.00 9.00 4.00
Low Estimate 0.64 0.65 2.75 2.94
High Estimate 0.74 0.71 2.94 3.27
Year Ago EPS 0.69 0.67 2.64 2.87

Update of 11-27-15

The low estimate has yet to move. It was $2.75 before the new earnings guidance was provided. HRL ended 2014 with an eleven cent spread between the high and low projections - and it is reasonable to expect the same kind of spread as this year ends - not the current twenty cent spread.

Earnings Est Current Qtr.
Jan 16		 Next Qtr.
Apr 16		 Current Year
Oct 16		 Next Year
Oct 17
Avg. Estimate 0.70 0.70 2.90 3.14
No. of Analysts 7.00 7.00 9.00 6.00
Low Estimate 0.64 0.67 2.75 3.03
High Estimate 0.75 0.71 2.95 3.27

Update of 11-30-15

Finally there is movement in the low projection. With 9 projections - a 12 cent improvement in the low projection fails to move the needle that much.

Earnings Est Current Qtr.
Jan 16		 Next Qtr.
Apr 16		 Current Year
Oct 16		 Next Year
Oct 17
Avg. Estimate 0.71 0.70 2.92 3.14
No. of Analysts 7.00 7.00 9.00 6.00
Low Estimate 0.67 0.67 2.87 3.03
High Estimate 0.75 0.72 2.95 3.27

Analyst's Disclosure: I am/we are long CL, GIS, HRL, HSY, INGR, PEP, PG, SJM.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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