Smithfield Foods (NASDAQ:SFD) Issues Quarterly Earnings Results

Smithfield Foods (NASDAQ:SFD) announced its earnings results on Tuesday. The company reported $0.26 EPS for the quarter, beating analysts’ consensus estimates of $0.25 by $0.01, Zacks reports. The firm had revenue of $3.44 billion for the quarter. Smithfield Foods had a net margin of 6.84% and a return on equity of 15.55%. The business’s quarterly revenue was down 8.3% on a year-over-year basis. During the same quarter last year, the firm posted $0.58 EPS.

Here are the key takeaways from Smithfield Foods’ conference call:

• Third-quarter results declined sharply: adjusted operating profit fell to $145 million from $310 million year over year, while adjusted EPS dropped to $0.26 from $0.58, primarily due to weaker fresh pork and hog production results.
• Packaged meats remained resilient, with volume up 0.2%, operating profit rising to $230 million, and margin expanding 80 basis points to 11.6% despite cautious consumers and higher freight, diesel, and resin costs.
• Smithfield lowered its full-year outlook, now expecting sales to decline by low single digits and adjusted operating profit of $900 million to $1 billion; fresh pork is expected to range from a $50 million loss to breakeven, reflecting oversupply, weak demand, export pressure, and tariffs.
• The company completed its acquisition of Nathan’s Famous, which is immediately accretive to adjusted EPS and offers additional retail and food-service growth opportunities; Smithfield also plans to reduce internally produced hogs by approximately 900,000 annually.
• Smithfield reported strong liquidity of $3.5 billion, net debt of 0.5 times adjusted EBITDA, and expects to pay $1.25 per share in annual dividends, but construction timing for its proposed Sioux Falls facility is uncertain after a court decision overturned its conditional-use permit.

Smithfield Foods Price Performance

SFD traded up $0.02 during trading on Thursday, reaching $18.48. 323,041 shares of the company traded hands, compared to its average volume of 1,496,462. The company has a market cap of $7.28 billion, a P/E ratio of 6.90 and a beta of -0.41. The company has a debt-to-equity ratio of 0.20, a quick ratio of 1.34 and a current ratio of 2.56. Smithfield Foods has a 12-month low of $17.91 and a 12-month high of $29.81. The firm has a fifty day simple moving average of $19.91 and a 200 day simple moving average of $24.04.

Analysts Set New Price Targets

A number of analysts have commented on the company. Zacks Research lowered Smithfield Foods from a “hold” rating to a “strong sell” rating in a report on Thursday, August 13th. Deutsche Bank Aktiengesellschaft set a $21.00 target price on Smithfield Foods in a research report on Friday, October 9th. The Goldman Sachs Group reaffirmed a “buy” rating and set a $32.00 price target on shares of Smithfield Foods in a report on Wednesday, August 12th. Bank of America lowered shares of Smithfield Foods from a “buy” rating to a “neutral” rating and set a $21.00 price target for the company. in a research note on Friday, October 9th. Finally, Stephens reissued a “reduce” rating on shares of Smithfield Foods in a report on Wednesday. Three equities research analysts have rated the stock with a Buy rating, one has assigned a Hold rating and three have given a Sell rating to the company. Based on data from MarketBeat.com, the company presently has a consensus rating of “Hold” and a consensus target price of $24.67.

About Smithfield Foods

Smithfield Foods, Inc is a food company engaged in pork production and the manufacture and sale of packaged meats. Its operations include hog production, fresh pork processing, and the preparation of bacon, ham, sausage, hot dogs, deli meats and other ready-to-cook or ready-to-eat products.

The company sells products under brands that include Smithfield, Eckrich, Nathan’s Famous and Farmland, as well as through private-label and foodservice channels. Its products are distributed through grocery retailers, restaurants, foodservice operators and other commercial customers in the United States and international markets.

Founded in Smithfield, Virginia, in 1936, Smithfield Foods expanded through acquisitions and became one of the world’s largest pork processors and hog producers.