The 10-second takeaway
For the quarter ended March 30 (Q3), Hillshire Brands missed estimates on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue dropped significantly. Non-GAAP earnings per share contracted significantly. GAAP earnings per share expanded.
Gross margins contracted, operating margins shrank, net margins grew.
Hillshire Brands booked revenue of $924.0 million. The eight analysts polled by S&P Capital IQ expected to see a top line of $953.3 million on the same basis. GAAP reported sales were 51% lower than the prior-year quarter's $1.90 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.35. The 10 earnings estimates compiled by S&P Capital IQ forecast $0.33 per share. Non-GAAP EPS of $0.35 for Q3 were 65% lower than the prior-year quarter's $1.00 per share. (The prior-year quarter included -$0.34 per share in earnings from discontinued operations.) GAAP EPS were $0.75 for Q3 versus -$0.04 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 29.4%, 180 basis points worse than the prior-year quarter. Operating margin was 7.3%, 300 basis points worse than the prior-year quarter. Net margin was 10.1%, much better than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $1.00 billion. On the bottom line, the average EPS estimate is $0.26.
Next year's average estimate for revenue is $3.99 billion. The average EPS estimate is $1.72.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 295 members out of 368 rating the stock outperform, and 73 members rating it underperform. Among 96 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 78 give Hillshire Brands a green thumbs-up, and 18 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Hillshire Brands is hold, with an average price target of $32.88.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.