Filed under: Earnings reports, Products and services, Consumer experience, Hormel Foods (HRL), Recession
The Associated Press reports that Spam sales are on the rise. Cans of Spam — a pig byproduct — are flying off the shelf as consumers are turning more to lunch meats and other lower-cost foods to extend their already stretched food budgets.
As I posted, consumers are going on a recession diet. I hadn’t thought of Spam as a way to play this trend. But its sales are up 10.6% and its manufacturer, Hormel Foods (NYSE: HRL) has seen its profits rise 14%. But the price of Spam is up more than Hormel’s stock, with the average 12 oz. can costing about $2.62. That’s an increase of 17 cents, or almost 7% from the same time last year.
Despite rising prices, Spam seems like a good substitute to consumers. AP quotes Kimberly Quan, a stay-at-home mother of three, who has been feeding her family more Spam in the last six months as she tries to make her food budget go further. “It’s canned meat and it’s in the cupboard and if everything else is gone from the fridge, it’s there.”
Spam was good enough for Allied troops in WW II. Yet Hormel stock is up a mere 4% in the last year. With earnings expected to rise 8.6% on a P/E of 16, the stock isn’t cheap.
So you need to decide: Is Spam good enough for your family and its stock portfolio?
Peter Cohan is President of Peter S. Cohan & Associates. He also instructs management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.
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