Meatpacker and refrigerated and packaged foods maker Hormel Foods (HRL 0.06%) reported an upbeat fiscal third quarter for 2020 this morning, chowing down on record-breaking results in at least one metric. The company beat analyst expectations with strong consumer sales, outweighing the impact of coronavirus-related restaurant closures.
In terms of analyst consensus forecasts, Hormel produced a positive surprise in both earnings and revenue. According to averages reported by Zacks Equity Research, predictions called for $0.33 earnings per share (EPS), with the actual $0.37 EPS surpassing that figure by 12.12%. The company also beat expected revenue of slightly more than $2.29 billion by 3.86% with its actual $2.38 billion of net sales.
Retail and deli sales were the engines driving Hormel's Q3 successes, though the company also notes recovery in foodservice sales. Net sales set a record, climbing 4% year over year for the 13 weeks ending July 26, while organic net sales rose 2%. Net earnings also increased 2%, while cash flow from operations soared 59% and operating free cash flow skyrocketed 72%.
Grocery products were Hormel's most successful segment for the quarter, with profits jumping 36% on sales of Spam canned meat, Dinty Moore stew, and other grocery items with a long shelf life, suitable for stockpiling or budget at-home eating. The international segment saw profits up 26% with both Spam and Skippy peanut butter trailblazing the way. Conversely, the Jennie-O Turkey Store's profits plunged 67% and refrigerated foods fell 11%, both reflecting restaurant sales weakness.
CEO Jim Snee ascribed Hormel's outstanding overall results to the flexibility its balanced portfolio offers. He expects similar outcomes in the fourth quarter, with foodservice recovering but still weaker year over year, and grocery strong.