Hormel Foods (NYSE: HRL) closed at $28.44 Tuesday. HRL is scheduled to report Q4 EPS on November 25. HRL overall option implied volatility of 41 is above its 26-week average of 30 according to Track Data, suggesting larger price movement.
Sanderson Farms (NYSE: SAFM) closed at $27.49 Tuesday. SAFM filed a $1 billion shelf registration for common and preferred shares on October 9 on the anticipation of using the proceeds to fund acquisitions. SAFM November option implied volatility of 91 is above its 26-week average of 58 according Track Data, suggesting larger price movement.
Pilgrim's Pride (NYSE: PPC), the largest chicken company in the U.S., closed at $1.40 Tuesday. PPC announced on October 27 lenders have agreed to provide continued liquidity under credit facilities. PPC December option implied volatility is at 239 according to Track Data, suggesting large price fluctuations.
Smithfield Foods (NYSE: SFD), a processor of packaged meats, closed at $9.49 Tuesday. SFD November option implied volatility of 166 is above its 26-week average of 88 according to Track Data, suggesting larger price movement.
Tyson (NYSE: TSN) closed $8.05 Tuesday. TSN is scheduled to report Q4 EPS on November 11. TSN November option implied volatility is at 133, December is at 124; above its 26-week average of 54 according to Track Data, suggesting larger price fluctuations.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Stock futures were trading down as Fannie Mae posted its fourth straight quarterly loss. Investors were awaiting word from a government report on worker productivity to see if there is any sign of an economic rebound. Those figures, though, proved disappointing.
Bloomberg News reported that worker productivity in the U.S. grew at a lower-than-expected rate in the second quarter as employers cut jobs to weather the jump in raw-material expenses. "Employers eliminated 165,000 jobs from April through June to shore up profits, and still managed to get more output with fewer workers," the news service says. "Gains in productivity help lower inflation and bolster the Federal Reserve's forecast that prices will moderate."
Fannie Mae (NYSE: FNM) posted its fourth straight quarterly loss and slashed its dividend. The second-quarter net loss was $2.3 billion, or $2.54 a share. Excluding one-time items, the loss was $2.51 a share, compared with the 72-cent average estimate of 10 analysts in a Bloomberg survey. Shares tumbled more than 12% in pre-market trading.
This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.
Ah, Spam. Doesn't the word make your mouth water? Or maybe not. Either way, Spam must be given its due. It is the most famous of the mystery meats, those exciting concoctions of the meat-packing industry. It has been sold by the billions of cans since its invention in 1937. It helped feed the Allies and win World War Two. It is central to a Monty Python skit about Vikings in a greasy spoon, and now a Broadway musical. It provides a name for unwanted e-mail. It theoretically lasts forever. And it is a product of the Hormel Foods Corporation (NYSE: HRL).
Spam is made in several places, but its ancestral home and main production facility is in Austin, Minnesota, sometimes called Spam Town. Austin is the small town south of Minneapolis that is home to Hormel, proud maker of all things Spam. (I should note that Hormel would prefer that we write "SPAM luncheon meat" but I don't think we'll take that suggestion too seriously.)
Hormel has long dominated the town of Austin, and not just because the Spam Museum is located there. It is by far the largest employer in town and the majority of workers in Austin work for Hormel, producing many of the company's meaty foods. Hormel's roots in the town go deep. Drawn by the town's good rail and river access, George A. Hormel opened a meat packing business there in 1891, and his small company eventually grew into the billion-dollar colossus that today owns a dizzying array of food brands, from Chi-Chi's and Valley Fresh to Dinty Moore and, of course, Spam. (Does it seem fair that one company gets to own both Dinty Moore and Spam?)
In tough financial times, certain food products and food preparation ideas seem to gain increasing favor with consumers. People try to find ways to prepare nutritious and interesting meals while gaining greater purchasing power from their hard-earned dollars.
Just the other day, some of us bloggers were engaged in a lively email chat regarding some of our tried-and-true strategies for stretching our grocery dollars. As you can guess, ramen noodles almost immediately took center stage. I was entertained with stories of the many ways that the slender pasta can be made quite appealing. For instance, if you take any brand of chunky salsa, cut it 50% with water, add a sliced hot dog and pour the heated mixture over the noodles, it's really a very delicious and satisfying meal.
As the discussion ebbed, I couldn't help but be amazed that no one had mentioned SPAM, by Hormel Foods Corp. (NYSE: HRL). Surely, I thought, these people must know about the illustrious history of SPAM! Could they ignore the fact that SPAM has carried literally millions of people though hard times since prior to World War II? Though there is probably a ratio of three SPAM jokes to every one SPAM recipe, the fact remains that Hormel's SPAM, in all its variations, still sells exceptionally well. It sells even better as times get tough, as indicated by a recent Associated Press overview.
Hormel Foods (NYSE: HRL), a foodstuffs processor whose colleagues include ConAgra Foods (NYSE: CAG) and Kraft (NYSE: KFT), issued its Q2 numbers on Thursday. Revenues jumped 6% to $1.6 billion, although the growth rate was only 4% if you look at just the amount credited to organic appreciation. Net earnings per diluted share rose 14% to $0.56 per share. Volume jumped 5% altogether, and 3% based on, once again, organic growth.
This wasn't a bad earnings report for a major supermarket brand, although it certainly wasn't overly stimulating, either. So, you wanna take a guess as to by how much Hormel beat earnings expectations? If you said "by the proverbial penny," then you just might be a Wall Street junkie! Seems like so many companies got the penny-thing down pat. Anyway, Briefing.com not only said that earnings were better by a penny, but that revenues came in pretty much as expected.
Basically, Hormel is trying to navigate this inflationary environment as best it can. As we all know, it's pretty competitive out there in the grocery aisles even during prosperous periods. But take a look at the cash-flow statement and you'll see that the company did pretty well in terms of net cash from operations. That metric soared almost 30% over the six-month period. Only problem is, not too much was left over after capital expenditures and dividend payments were taken into account. Still, Hormel seems reasonably fine for now on the cash-flow front.
I'm not necessarily interested in Hormel's stock at this time. If I wanted to get in, I certainly would look to pick up shares at a higher yield; there are better opportunities out there for dividend yield, in my opinion. As Joseph Lazzaro observed a couple months back, Hormel is definitely an interesting defensive name during challenging economic times, and I did enjoy the double-digit bottom-line growth. I just think investors would be better off if this one came down a bit in terms of share price.
Disclosure: I don't own shares in any company mentioned here; positions can change at any time.
With the markets still in a choppy/consolidation mode (or perhaps worse), it's best to consider including a few defensive stocks in your portfolio. With the aforementioned in mind, Hormel Foods is worth an evaluation.
Hormel Foods (NYSE: HRL) is a diversified producer of consumer foods. A processor of the now universally known "spiced ham" product -- SPAM -- Hormel is also a top U.S. turkey processor and a major pork processor, including the Jennie-O turkey, Cure 81 hams and Always Tender fresh pork brands.
In general, analysts expect 5-7% revenue growth for Hormel for FY2008, with an adequate performance from its grocery division, with pricing power offsetting lower volumes.
Meanwhile, refrigerated foods should outperform expectations in FY2008, with widening margins; specialty foods demand probably will be flat.
Stock futures were mixed to lower this morning, indicating investors await data and earnings to better determine the state of the economy and whether it is on a brink of recession as former Federal Reserve chairman Allan Greenspan said late Thursday.
Thursday, U.S. stocks sold off, breaking a three-session winning streak following current Fed chairman Bernanke's testimony. While Bernanke hinted at more rate cuts ahead, he also said that economic outlook had worsened in the last three months. The Dow industrials dropped 175 points, or 1.4%, the S&P 500 lost 18 points, or 1.34%, and the Nasdaq Composite dropped 41 points, or 1.74%.
Several economic readings are due out today:
At 8:30 a.m. EST, the Labor Department will report January import and export prices.
At the same time, the Empire State Index will be released, giving an idea of the region's manufacturing activity.
At 9:15 a.m. EST, January industrial production and capacity utilization will be released.
At 10:00 a.m. EST, the University of Michigan will give its preliminary reading on consumer confidence in February.
Almost six million pounds of ground beef suspected of harboring E. coli bacteria has been recalled by United Food Group LLC. The bad beef was sold throughout the West in groceries including Albertson's, Trader Joe's and Sav-A-Lot, under brand names Moran's All Natural (too natural, if you ask me), Miller Meat Company, Stater Bros., Trader Joe's Butcher Shop, Inter-American Products Inc. and Basha's. Fourteen cases of E. coli illness have been linked to the beef since April 25.
Last year, the U.S. population consumed 28 billion pounds of beef, from almost 34 million head of bovine, worth in excess of $37 billion. While the United Food Group is an LLC, the specter of contaminated beef could impact publiclly traded beef vendors such as Hormel Foods (NYSE: HRL) and Smithfield Foods (NYSE: SFD) as well.
To put the magnitude of this recall in perspective, if we assume the average American adult weighs 175 pounds, it represents the weight of 34,285 people -- the entire population of Beverly Hills, CA, or Panama City, FL or Rome, NY.
The news comes at a particularly vulnerable time for the U.S. export market, as China is vigorously responding to the criticism of its food processing in the tainted pet food scandal by placing American food imports under the microscope. Over the weekend, Chinese officials rejected a shipment of American pistachios because they found ants among the nuts.
United Food Group has set up a hot line to answer questions about the recall, 1-800-325-4164.
DJIA 12,216.24; Down 416.02 (3.29%) NASDAQ 2,407.87; Down 96.65 (3.86%) S&P500 1,399.04; Down 50.33 (3.47%) 10Yr-Bond 4.5130%; Down 0.1180 NYSE-Volume 4,164,578,000 NASD-Volume 3,045,369,000 VIX 18.31 (+7.16)
This was the worst drop on the DJIA since the pre-Iraq trading, and since after the market reopened following the September 11, 2001 tragedy; all 30 DJIA components closed down on the day. The massive sell-off seen today was on record NYSE trading volume. Was writing about the VIX showing a complacency on the 'fear index' part of the reasoning of a drop? Or was it the record margin borrowing on stocks? We can blame China, we can blame a horrible Durable Goods number, we can blame ex-FOMC head Greenspan for hinting at the risks of a recession. Blame whatever you want, but the selling built and built, and when the NYSE trading curbs were lifted, the market took a bungee jump.
There have been reports that many of the stocks actually got stuck at low prices and there is also talk that the programs went unchecked and the electronic trading allowed the markets to suddenly tank. There was a flurry of trades around 3:00 PM EST where all of a sudden the programs took the market from down more than 200 points to down more than 500 points. You can probably bet there were many computing errors from the automated system on such large trading volume. This was a record day on NYSE volume and the system froze on many stocks. John Thain's argument for creating a trading floor without people [pdf link] just got hosed, and rightfully so. In a world where floor brokers work alongside electronic trading, the market is obligated to maintain a somewhat orderly function.
Here are the basic go-to stocks that holders tend to flock to when the stock market sells off heavily.
Hormel Foods (NYSE: HRL) closed at $28.44 Tuesday. HRL is scheduled to report Q4 EPS on November 25. HRL overall option implied volatility of 41 is above its 26-week average of 30 according to Track Data, suggesting larger price movement.
Stock futures were trading down as Fannie Mae posted its fourth straight quarterly loss. Investors were awaiting word from a government report on worker productivity to see if there
This post is part of our 
In tough financial times, certain food products and food preparation ideas seem to gain increasing favor with consumers. People try to find ways to prepare nutritious and interesting meals while gaining greater purchasing power from their hard-earned dollars.
Almost six million pounds of ground beef suspected of harboring E. coli bacteria 
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