Smithfield Foods, Inc. (SFD) is up almost 30% in the last 6 weeks, getting a boost from the bullish market and record Q2 results that came in ahead of expectations. With an average earnings surprise of 19% over the last four quarters and solid 9% growth projection, this Zacks #1 Rank stock has an appetite for momentum.
Company Profile
Smithfield Foods, Inc., together with its subsidiaries, produces and sells fresh and packaged meats in the United States and internationally. The company was founded in 1961 and has a market cap of $3.8 billion.
Smithfield posted outsized gain in the bullish October market, lifted by record Q2 results that came in ahead of expectations.
Third-Quarter Results
Sales for the period were up 7% from last year to $3.1 billion. Earnings also came in strong at 69 cents, 1.5% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 19% over the last four quarters.
The good quarter was driven a sharp increase in live hog selling prices, up 19% from last year as global protein inventories remain low. And even though raw material costs were on the upswing, the company saw margin run rate above the normalized range at 8% on strong sales results and increased operational efficiencies.
Estimates
We saw some a little movement in estimates off the good quarter, with the current year up 5 cents to $2.34. The next-year estimate is pegged at $2.55, a bullish 9% growth projection.
Valuation
But in spite of the gains, the valuation picture still looks solid, with a PEG ratio of 1.11 only marginally higher than the benchmark of 1 for value.
3-Month Chart
On the chart, SFD saw big gains in October, moving back within striking distance of the multi-year high just short of $25. Take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Whisper Trader Service.
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