The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how shelf-stable food stocks fared in Q1, starting with General Mills (NYSE:GIS).
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 decent Q1; on average, revenues beat analyst consensus estimates by 0.5%. while next quarter's revenue guidance was 1.6% below consensus. 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. The start of 2024 has been a different story as mixed signals have led to market volatility, and while some of the shelf-stable food stocks have fared somewhat better than others, they collectively declined, with share prices falling 3.4% on average since the previous earnings results.
General Mills (NYSE:GIS) Best known for its portfolio of powerhouse breakfast cereal brands, General Mills (NYSE:GIS) is a packaged foods company that has also made a mark in cereals, baking products, and snacks.
General Mills reported revenues of $5.10 billion, down 0.5% year on year, topping analysts' expectations by 2.7%. It was a solid quarter for the company, with an impressive beat of analysts' organic revenue growth estimates and a decent beat of analysts' earnings estimates.
“General Mills’ strategic focus on brand building, innovation, and in-store execution contributed to improved volume and market share trends in the third quarter,” said General Mills Chairman and Chief Executive Officer Jeff Harmening.
The stock is down 3.1% since the results and currently trades at $66.55.
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Best Q1: Hershey (NYSE:HSY) Best known for its milk chocolate bar and Hershey's Kisses, Hershey (NYSE:HSY) is an iconic company known for its chocolate products.
Hershey reported revenues of $3.25 billion, up 8.9% year on year, outperforming analysts' expectations by 4.5%. It was a stunning quarter for the company, with an impressive beat of analysts' gross margin estimates.
The stock is down 7.2% since the results and currently trades at $181.9.
Weakest Q1: 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 $1.46 billion, up 16.3% year on year, falling short of analysts' expectations by 11.8%. It was a weak quarter for the company, with full-year revenue guidance missing analysts' expectations and a miss of analysts' operating margin estimates.
Lamb Weston had the weakest performance against analyst estimates and weakest full-year guidance update in the group. The stock is down 19.1% since the results and currently trades at $81.75.
SunOpta (TSX:SOY) (NASDAQ:STKL) Committed to clean-label foods, SunOpta (NASDAQGS:STKL) is a sustainability-focused food and beverage company specializing in the sourcing, processing, and packaging of natural and organic products.
SunOpta reported revenues of $182.8 million, up 18% year on year, surpassing analysts' expectations by 8.3%. It was a solid quarter for the company, with full-year revenue guidance exceeding analysts' expectations and a decent beat of analysts' gross margin estimates.
SunOpta scored the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is down 0.5% since the results and currently trades at $5.61.
McCormick (NYSE:NYSE:MKC) The classic red Heinz ketchup bottle’s competitor, McCormick (NYSE:MKC) sells food-flavoring products like condiments, spices, and seasoning mixes.
McCormick reported revenues of $1.60 billion, up 2.4% year on year, surpassing analysts' expectations by 3.3%. It was a very strong quarter for the company, with an impressive beat of analysts' organic revenue growth estimates and a decent beat of analysts' earnings estimates.
The stock is down 1.9% since the results and currently trades at $68.56.
