Shares of Hormel Foods Corp. (NYSE: HRL) fell more than 4 percent on Thursday, after firm posted lower than expected second quarter profit as higher feed costs held profit back.
The company said Thursday that it earned $68 million, or 49 cents a share, up 1 percent from $67.3 million, or 48 cents, during the same period a year ago.
Total sales came in at $1.5 billion, up from $1.37 billion last year for its second quarter.
Analysts had expected the company to earn 51 cents a share on sales of $1.45 billion, according to a poll by Thomson's Financial.
Hormel, the maker of Spam and Dinty Moore, saw increased performance across all its lines except for its Jennie-O Turkey Store.
The only problem appears in the turkey division where higher feed costs pinched margins much more than we expected, commented John McMillin of Prudential Securities. Higher feed costs totaled $22 million in the period.
Although the short-term margin pressure would not affect Hormel's long-term prospects, McMillin warned that the uncertainty around corn prices might produce some nervousness for this stock and others tied to corn.
The company also trimmed its full year out look to $2.12 to $2.22 from $2.15 to $2.25 a share.
Hormel shares lost $1.60, or 4.07 percent to reach $37.73 in mid day trading on the New York Stock Exchange.