Remember when health experts advised Americans to reduce their consumption of animal fats found in red meat and pork? That seems practically laughable now, and Hormel Foods
The meat and poultry specialist turned in second-quarter earnings of $0.39 per share yesterday, a surge of 58% from the $0.24 per share it reported in the same period last year. This stellar performance was driven by double-digit growth in several product lines, including Hormel bacon, pepperoni, and Canadian bacon. With strength across so many products, Hormel must feel like it's living in a regular porktopia.
Some might question whether Hormel's good fortune will last. After all, at least some of its success must have to do with the low-carb diet craze, and in the past few days, a number of news stories have suggested that over the long term, weight loss for people on low-carb diets is comparable to that of those on low-fat regimens. A few pundits have come forward and predicted that before long, the low-carb agenda will be dismissed as a silly fad. Perhaps, but I doubt it.
All the latest studies essentially point out is that both low-carb and low-fat plans lead to weight loss, but low-fat takes longer. Given a choice, it seems to me that most people would elect to continue to enjoy "protein pleasure" on their way to weight loss rather than to have to deny themselves a succulent side of beef or pork. (OK, so I'm biased.)
Hormel itself seems to be playing it conservative by keeping full-year earnings guidance steady at $1.50 to $1.62 per share. Nonetheless, if current trends remain steady, an upside seems possible. Unfortunately, since Motley Fool contributor Paul Jaber Jr. cited Hormel as a good buy back in January, its stock has had a nice run. So for now, Hormel might just be too rich an indulgence.
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Fool contributor Brian Gorman is a freelance writer living in Chicago, Ill. He does not own shares of any companies mentioned here.
