Hormel shares up 4% after sizzling earnings

Updated: February 18, 2010 - 6:04 PM

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Shares of Hormel Foods Corp., the maker of Spam luncheon meat, climbed to their highest price in almost two years after first-quarter profit beat analysts' estimates by 14 cents a share.

Net income increased to $111.2 million, or 82 cents a share, in the 13 weeks ended Jan. 24, from $81.4 million, or 60 cents a share, a year earlier, Austin, Minn.-based Hormel said Thursday. Profit topped the 68-cent average estimate of eight analysts surveyed by Bloomberg.

"The earnings beat was pretty sizable, and it was broad-based," Matt Arnold, an analyst at Edward Jones & Co. in St. Louis who recommends buying the shares, said in a telephone interview. "In some quarters they have one division that outshines the others, but this time all three moved the needle."

Hormel shares rose $1.68, or 4.1 percent, to close at $42.27, their highest price since April 2008. The shares have jumped 9.9 percent this year.

Revenue from Hormel's grocery products segment gained 8.1 percent in the quarter on increased sales of Hormel chili, Dinty Moore stews and Mexican food products. The unit accounts for 15 percent of company sales, which were $1.73 billion in the quarter, up 2.3 percent.

The company raised its full-year earnings forecast to $2.68 to $2.78 a share from $2.63 to $2.73 a share.

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