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 (NYSE:HRL), for one, seems to be laughing all the way to the bank.
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.
