Smithfield Foods Inc. Earnings: Margins Shrink as Costs Rise, Profit Falls

Smithfield Foods Inc. (NYSE:SFD) reported its results for the third quarter. Smithfield Foods is a hog producer and pork processor that produces and markets a number of fresh meat and packaged meats products both domestically and internationally.

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Smithfield Foods Earnings Cheat Sheet for the Third Quarter

Results: Net income for Smithfield Foods Inc. fell to $79 million (49 cents per share) vs. $202.6 million ($1.21 per share) a year earlier. This is a decline of 61% from the year-earlier quarter.

Revenue: Rose 9.2% to $3.48 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Smithfield Foods Inc. reported adjusted net income of 69 cents per share. By that measure, the company beat the mean estimate of 67 cents per share. Analysts were expecting revenue of $3.5 billion.

Quoting Management: “I am very pleased to report another quarter of strong profitability and, in particular, the progress we have made in improving the quality and consistency of our earnings. Notably, our year to date adjusted earnings closely tracked last year’s record results,” said C. Larry Pope, president and chief executive officer.

Key Stats:

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 7 cents in the second quarter, by one cent in the first quarter, and by 3 cents in the fourth quarter of the last fiscal year.

Gross margin shrank 3.4 percentage points to 10.9%. The contraction appeared to be driven by increased costs, which rose 13.5% from the year earlier quarter while revenue rose 9.2%.

Revenue has risen the past four quarters. Revenue increased 10.5% to $3.31 billion in the second quarter. The figure rose 6.6% in the first quarter from the year earlier and climbed 7.1% in the fourth quarter of the last fiscal year from the year-ago quarter.

Looking Forward: Expectations for the company’s next-quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the fourth quarter has risen to 61 cents per share from 47 cents. Over the past three months, the average estimate for the fiscal year has climbed from $2.41 per to share to $2.71.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com