Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Hershey (NYSE:HSY) and the best and worst performers in the shelf-stable food industry.
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 0.7% while next quarter’s revenue guidance was 0.7% below.
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Thankfully, shelf-stable food stocks have been resilient with share prices up 7.7% on average since the latest earnings results.
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 $2.07 billion, down 16.7% year on year. This print fell short of analysts’ expectations by 10.6%. Overall, it was a disappointing quarter for the company with a miss of analysts’ organic revenue growth and earnings estimates.
"Today's operating environment remains dynamic with consumers pulling back on discretionary spending," said Michele Buck, The Hershey Company President and Chief Executive Officer.
Hershey Total Revenue
Hershey delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. Interestingly, the stock is up 1% since reporting and currently trades at $199.34.
Spun out of Post Holdings in 2019, Bellring Brands (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%. The business had an exceptional quarter with an impressive beat of analysts’ gross margin and organic revenue growth estimates.
BellRing Brands Total Revenue
The market seems happy with the results as the stock is up 20.7% since reporting. It currently trades at $59.59.
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 disappointing quarter as it posted underwhelming earnings guidance for the full year and a miss of analysts’ organic revenue growth estimates.
Lamb Weston delivered the weakest full-year guidance update in the group. As expected, the stock is down 16.4% since the results and currently trades at $65.69.
Sold in over 75 countries around the world, Hain Celestial (NASDAQ:HAIN) is a natural and organic food company whose products range from snacks to teas to baby food.
Hain Celestial reported revenues of $418.8 million, down 6.5% year on year. This number met analysts’ expectations. It was a very strong quarter as it also logged an impressive beat of analysts’ earnings and organic revenue growth estimates.
The stock is up 17.8% since reporting and currently trades at $8.06.
Founded in 1919 as Nebraska Consolidated Mills in Omaha, Nebraska, Conagra Brands today (NYSE:CAG) boasts a diverse portfolio of packaged foods brands that includes everything from whipped cream to jarred pickles to frozen meals.
Conagra reported revenues of $2.91 billion, down 2.3% year on year. This result was in line with analysts’ expectations. Zooming out, it was a disappointing quarter as it produced a miss of analysts’ organic revenue growth estimates and underwhelming earnings guidance for the full year.
The stock is up 13.1% since reporting and currently trades at $32.59.
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