Smithfield to Miss in Q4: Preview - Analyst Blog
04 Décembre 2012 - 5:40PM
Zacks
We expect meat producer Smithfield Foods Inc
(SFD) to miss expectations when it reports second quarter 2013
results on December 5.
While Smithfield Foods has generated positive surprises in the
past, it has not done very well this year, missing the Zacks
Consensus Estimate by 18.9% and 11.1% in the April and July
quarters, respectively. This in turn pulled down the average
surprise percentage to -4.2% in the trailing four quarters.
Smithfield Foods is one of the worst
affected by the poor corn crop this year, which increased feed
costs in the last-reported quarter, in turn increasing the cost of
hog production. Ample hog supply also impacted hog pricing, thus
cutting margins on both counts.
Pork segment restructuring initiatives are a positive, and
higher slaughtering could stem margin contraction here. But the
effect is unlikely to be long-lived, as weak demand will soon lead
to packaged inventory build-up, which will again impact prices, and
therefore, margins.
In the last 60 days, there
were a couple of downward revisions in estimates for the October
quarter, which had the Zacks Consensus Estimate moving down 2 cents
(4.5%) to 44 cents. Estimates for fiscal years 2013 and 2014 have
moved up however, from $1.82 to $1.84 (1.1%) and from $2.19 to
$2.26 (3.2%), respectively.
The Zacks ESP (Expected Surprise Prediction) is -13.64% for the
October quarter, indicating that the company is likely to miss
estimates this quarter.
Performance across the sector has been mixed so far, with
Zhongpin Inc (HOGS) missing the Zacks Consensus by
23.1%, Tyson Foods (TSN), beating the Zacks
Consensus by 27.9% and Hormel Foods (HRL)
reporting in line. Sanderson Farms (SAFM) is yet
to report and given its Zacks ESP of 41.38%, it is unlikely to
disappoint.
SmithField, Hormel and Sanderson currently have a Zacks Rank #3
(Hold), compared with Zhongpin, which has a Zacks Rank #5 (Strong
Sell) and Tyson Foods, which has a Zacks Rank #2 (Buy).
ZHONGPIN INC (HOGS): Free Stock Analysis Report
HORMEL FOODS CP (HRL): Free Stock Analysis Report
SANDERSON FARMS (SAFM): Free Stock Analysis Report
SMITHFIELD FOOD (SFD): Free Stock Analysis Report
TYSON FOODS A (TSN): Free Stock Analysis Report
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