Hormel shares up premarket after earnings top estimates

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Hormel Foods Corp. shares rose 1.6% in premarket trade Tuesday, after the parent of food brands, including Skippy peanut butter, Spam and Applegate posted better-than-expected earnings for its fiscal third quarter. Hormel said it had net income of $203.1 million, or 37 cents a share, in the quarter to July 26, compared with income of $199.4 million, or 37 cents a share, in the year-earlier period. Sales rose to $2.381 billion from $2.291 billion. The FactSet consensus was for EPS of 34 cents and sales of $2.366 billion. Chief Executive Jim Snee said the company saw strength across its retail and deli businesses, along with a rebound in its foodservice business. “We expect the fourth quarter to mirror many of the dynamics we saw in the third quarter,” Snee said. “However, the magnitude of additional recovery in the foodservice industry, the performance of the entire food supply chain and the state of the broader economy remain highly uncertain.” The company absorbed about $40 million in supply chain costs related to lower production volumes, employee bonuses and enhanced safety measures at its production facilities. “On a year-to-date basis, total incremental costs were $60 million, and the range of incremental costs in the fourth quarter is $20-$40 million. The total incremental supply chain costs are anticipated to be $80-$100 million in fiscal 2020,” it said in a statement. Shares have gained 17% in the year to date, while the S&P 500 has gained 6%.

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