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Analyst lowers Smithfield 2013 earnings estimate on cost concerns
Story Date: 8/21/2012
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Source: Chris Scott, MEATINGPLACE, 8/21/12
Higher grain costs and lower hog prices prompted Stephens Inc. analyst Farha Aslam to lower her estimates for Smithfield Foods Inc.’s fiscal 2013 earnings to $1.80 per share from $2.10.
Aslam says the estimated cost of raising hogs in its model are at $67 per head, slightly higher that the mid-$60s figure given by Smithfield before it began feeling the full effects of higher grain prices. Ongoing concerns about hog costs and expected higher corn and soybean meal prices also prompted Aslam to lower the fiscal 2014 estimate to $1.60 from $1.85. The new figure is 84 cents below the consensus estimate of $2.44 a share, which range from $1.75 to $3.30.
Smithfield is expected to post first-quarter operating earnings of 45 cents a share on Sept. 4, down from 69 cents in the year-ago period. Aslam expects Smithfield to post an operating profit of about $150 million in the period, a 32-percent drop from the $222.2 million reported in the first quarter of last year.
Looking forward, she expects the hog production profit to fall to about $36 million from $113 million in the first quarter of 2013, with fresh pork income down 32 percent to $24 million. On the brighter side, Smithfield should see its international operating profit reach $15 million, up from zero one year ago, and packaged meats see as much as a one-percent increase in operating income to $103 million, she reports.
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