Being the prematurely crusty investor and commentator that I am, I take a dim view of companies that promote their investment performance in their financial reports. While I can understand why Smithfield Foods
Speaking of performance, the company's second quarter proved to be slightly challenging. Sales were up close to 7%, but operating profits were down 4%, and reported net profit fell 12%. Factoring in some restructuring charges, performance was better but still down year over year.
As goes pork, so goes Smithfield. Sales of pork products were down 3%, and reported operating profit slid 31%. Fresh pork volume was down about 3%, while processed volume increased 2%. The company saw very solid performance in processed categories like precooked bacon, sausage, and ribs.
On the other side of the pig gig, the company's hog production operations saw sales decline 8%, but reported operating profit improved 5%. Year-over-year comparisons are a bit tricky, though; there were net hedging losses of $24 million in the year-ago quarter.
In some respects, it's difficult to find much fault with this company. It's got a solid stock market track record and has some advantages over less-integrated meat producers like Tyson
Still, I like Hormel, with its superior margins and returns on capital, more than Smithfield right now. While Smithfield doesn't strike me as overpriced, I'm not sure it's a top-notch idea for new money right now.
For more meaty missives:
- Hormel Has Meat on Its Bones
- Tyson Foods' Fowl Fortunes
- Too Few Piggies Going to Market
- ConAgra's Bittersweet Quarter
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).