As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the shelf-stable food industry, including Hormel Foods (NYSE:HRL) and its peers.
As America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.
The 21 shelf-stable food stocks we track reported a mixed Q2. As a group, revenues missed analysts’ consensus estimates by 0.9% while next quarter’s revenue guidance was 0.7% below.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility. Thankfully, shelf-stable food stocks have been resilient with share prices up 7.2% on average since the latest earnings results.
Hormel Foods (NYSE:HRL) Best known for its SPAM brand, Hormel (NYSE:HRL) is a packaged foods company with products that span meat, poultry, shelf-stable foods, and spreads.
Hormel Foods reported revenues of $2.90 billion, down 2.2% year on year. This print fell short of analysts’ expectations by 2.2%. Overall, it was a slower quarter for the company with full-year revenue guidance missing analysts’ expectations.
Unsurprisingly, the stock is down 3.2% since reporting and currently trades at $32.08.
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Best Q2: BellRing Brands (NYSE:BRBR) Spun out of Post (NYSE:POST) Holdings in 2019, Bellring Brands (NYSE:NYSE:BRBR) offers protein shakes, nutrition bars, and other products under the PowerBar, Premier Protein, and Dymatize brands.
BellRing Brands reported revenues of $515.4 million, up 15.6% year on year, outperforming analysts’ expectations by 2%. It was a good quarter for the company with an impressive beat of analysts’ gross margin and organic revenue growth estimates.
The market seems happy with the results as the stock is up 15.2% since reporting. It currently trades at $56.85.
Weakest Q2: Lamb Weston (NYSE:LW) Best known for its Grown in Idaho brand, Lamb Weston (NYSE:LW) produces and distributes potato products such as frozen french fries and mashed potatoes.
Lamb Weston reported revenues of $1.61 billion, down 4.9% year on year, falling short of analysts’ expectations by 5.5%. It was a weak quarter for the company with underwhelming earnings guidance for the full year and a miss of analysts’ organic revenue growth estimates.
Lamb Weston had the weakest full-year guidance update in the group. As expected, the stock is down 21.1% since the results and currently trades at $62.03.
J&J Snack Foods (NASDAQ:JJSF) Best known for its SuperPretzel soft pretzels and ICEE frozen drinks, J&J Snack Foods (NASDAQ:JJSF) produces a range of snacks and beverages and distributes them primarily to supermarket and food service customers.
J&J Snack Foods reported revenues of $440 million, up 3.3% year on year, in line with analysts’ expectations. Overall, it was a mixed quarter for the company with a narrow beat of analysts’ operating margin estimates but a miss of analysts’ gross margin estimates.
The stock is up 5.1% since reporting and currently trades at $167.49.
Simply Good Foods (NASDAQ:SMPL) Best known for its Atkins brand that was inspired by the popular diet of the same name, Simply Good Foods (NASDAQ:SMPL) is a packaged food company whose offerings help customers achieve their healthy eating or weight loss goals.
Simply Good Foods reported revenues of $334.8 million, up 3.1% year on year, in line with analysts’ expectations. Overall, it was a good quarter for the company with a decent beat of analysts’ gross margin estimates.
The stock is down 8% since reporting and currently trades at $33.28.
This content was originally published on Stock Story
