Hormel stock heads lower as 2023 forecasts lag expectations

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Hormel Foods (NYSE:HRL) shares sank sharply in premarket trading on Wednesday as cautious commentary on 2023 overshadowed record sales in 2022.

For the fourth quarter reported on Wednesday, the packaged food provider posted $0.51 in GAAP EPS of $0.51, beating expectations by $0.02, while $3.28B in revenue only narrowly missed expectations and helped bring full-year sales to a record level. Operating margin expanded 80 basis points from the prior year quarter despite increased costs.

"We achieved all-time record sales and double-digit profit growth in fiscal 2022,” CEO Jim Snee said. “In the fourth quarter, our team delivered diluted earnings per share comparable with record results last year, which included an additional week of sales. These results further demonstrate that our brands remain healthy, and the strategic investments we have made are enabling growth.”

However, the Austin, Minnesota-based company’s forecast into 2023 came up short of expectations. Management’s guidance implies net sales of $12.6B to $12.9B in 2023, short of the $12.95B consensus estimate, and EPS in the range of $1.83 to $1.93, short of the $2.00 expectation on the Street.

"We expect to operate in a volatile, complex and high-cost environment again in fiscal 2023," Snee explained. "We have benefited from our balanced business model, which is not heavily dependent on any one channel, protein, input or product category.”

Shares of Hormel (HRL) fell 7.1% shortly after posting the earnings results.