Hormel Foods, a multinational manufacturer and marketer of consumer-branded food and meat products, issued decent financials for its fiscal 2015 third quarter. Revenues decreased 4.2% y-o-y to $2.19 bn, mostly in line with expectations. Sales in the company’s Jennie-O Turkey Store segment fell 12.1% to $336.5 mn led by the avian influenza outbreak that posed several supply-chain challenges. Sales in Refrigerated Foods and International & Other segments also declined. At the same time, revenues from the Grocery Products segment were up 7.9% to $388.1 mn driven by increased demand for the company’s MegaMex Foods products, chili and skippy peanut butter, and Wholly Guacamole dips. The Specialty Foods revenues jumped 30.7% to $282.8 mn due to higher muscle milk product sales. Operating income grew 5.3% y-o-y to $236.6 mn, and operating margin advanced 120 basis points to 10.6%. Adjusted earnings per share rose 9.8% y-o-y to 56 cents and were a penny ahead of analysts’ average projection. Hormel Foods exited FQ3 with cash and cash equivalents of $349.2 mn and long-term debt of $250 mn. For the first three quarters of fiscal 2015, the company generated cash of $690.2 mn from its operating activities, up 75% y-o-y. Dividends amounted to $184.8 mn, up 22.9% y-o-y. A quarterly dividend of 25 cents per share offers annualized dividend yield of 1.6%. Hormel Foods believes that increased demand for foodservice & retail value-added products and lower pork costs would boost growth in revenues and margins, going ahead. The company hopes to offset the persistent adversities in the global meat industry, led by the outbreak of avian influenza, with the help of its strategic business model. Aided by the recent acquisition of Applegate, Hormel Foods intends to expand its organic and natural meat business. Based on these optimistic factors, the company raised its fiscal full-year 2015 earnings per share guidance to a range of $2.57-2.63 from the previous projection of $2.50-2.60. Hormel Foods’ shares, I believe, look attractive for medium-term investment. Target price is $70. $HRL, Hormel Foods Corporation / 1440