With all the hype about Mr. Atkins' runaway diet, you might expect meat maker Hormel Foods
According to management, the best performers are fully cooked entrees like its Jennie-O "So Easy" line and a product that could have been concocted by scriptwriters for The Simpsons: pre-cooked bacon. Mmmmm... pre-cooked bacon.
Our slothful attitude toward culinary chores helped Hormel turn in a 9% gain in per-share earnings, to $0.37. (Back out last year's unusual $0.02 gain and the uptick is an even better 15.6%)
The international division also contributed strong results, and not just because of the dollar's continuing plunge. Volume was up 47%, much of it attributed to the overseas success of SPAM. (I find that product's popularity outside the U.S. to be a cultural mystery matched only by the German love of David Hasselhoff.)
Grocery products continued to drag, however. In a rationalization so bizarre you know I couldn't make it up, management said it expects further challenges in the division due to last year's "war-induced pantry loading."
What does all this mean for stockholders? Management issued full-year guidance ranging from $1.46 to $1.60 per share. Split the difference, and at a share price of $27.50, Hormel trades at 18 times forward earnings. That's creeping toward Fool contributor Paul Jaber's recent estimate of fair value. Anyone hunting for a better bargain in prepared foods and pork processing might want to take a look at Motley Fool Income Investor selection Sara Lee
Looking for SPAM prep tips? Join Foolish food hounds in our Recipes and Cooking discussion board.
Fool contributor Seth Jayson is morally opposed to pre-cooked bacon. But he's fine on canned meats, and he has no stake in any company mentioned above.
