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Should You Buy Hormel Foods (HRL) Ahead of Its Q2 Earnings?

Hormel Foods HRL is a multinational manufacturer of branded meat products.  The company is home to names such as Black Label, Chi-Chi’s, Dinty Moore, and of course, Hormel.  HRL has a diversified product portfolio, offering various pork products, canned luncheon meats, stews, meat spreads, microwaveable entrees, frozen foods, and more. 

Hormel has a market cap of $20.42 billion, and it also doles out a 1.51% dividend yield.  There isn’t as much price fluctuation with its stock, as it has a beta of just 0.62.  This might do your portfolio some good with regards to minimizing your exposure to market volatility. 

The company has a nice growth story going for it, consistently increasing revenues and net income year after year.  The company definitely looks like it’s heading in the right direction for the long run, but should you buy its stock before it releases its earnings on the 18th of May?

HRL has received two positive earnings estimate revisions from financial analysts over the last 60 days for this quarter.  In that same time frame, no analysts have revised estimates lower for Hormel.  Our quarterly consensus estimate has trended upwards over the last 90 days, going from $0.35 to $0.38.  It should be noted that our fiscal year consensus has increased over the last 3 months as well, going from $1.46 to $1.57.

The company has consistently beaten our EPS consensus estimate in each of the last four quarters, and Hormel beat the estimate by 16.22% last quarter.  The graph below does a nice job of showing how HRL’s share price has reacted to consistent earnings beats over the last few years.

Bottom Line

Hormel Foods is a Zacks Rank #1 (Strong Buy).  It also has an Earnings ESP (Expected Surprise Prediction) of 5.26%.  When a company has a positive ESP and a Zacks Rank #3 (Hold) or better, it has close to an 80% chance in meeting or beating our EPS consensus estimate.  Hormel Foods looks like a great company to invest in for the long run.  At the same time, it seems to have a lot of potential in bringing gains to your portfolio over the short term.

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