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On Wednesday, Smithfield Foods (NASDAQ:SFD) stock retained its Buy rating from Goldman Sachs, with the firm’s analyst Leah Jordan setting a steadfast price target of $32.00. According to InvestingPro data, the stock currently trades at $19.14, suggesting significant potential upside to analyst targets ranging from $23 to $32. With a market capitalization of $7.5 billion and an attractive P/E ratio of 9.5x, InvestingPro analysis indicates the stock is currently undervalued. Following the company’s fourth-quarter earnings and fiscal year 2025 guidance release, shares of Smithfield Foods concluded the day with a 2.4% decline, contrasting with the S&P 500’s slight 0.2% gain and the Consumer Staples Select Sector SPDR Fund (XLP) dropping by 0.9%. The market’s reaction was largely tied to remarks made about the first quarter, which seemed to raise investor concerns.
Despite the dip in share price, Goldman Sachs expressed ongoing confidence in Smithfield Foods, particularly highlighting the robustness of its packaged meats portfolio and favorable conditions for hog production recovery. The analyst noted that the first-quarter commentary aligns with expectations set during the company’s initial public offering (IPO) process. InvestingPro’s Financial Health Score rates the company as "FAIR," with particularly strong scores in relative value metrics. The observed year-over-year softness in the packaged meats segment was attributed to timing issues, such as the shift in Easter and a slight delay in pricing adjustments in response to rising input costs.
Looking ahead, Goldman Sachs believes that the guidance provided for fiscal year 2025 has been appropriately de-risked. The firm’s reiteration of the Buy rating and price target reflects a positive outlook for Smithfield Foods over the next 12 months. The company’s performance and strategic positioning seem to be in line with Goldman Sachs’ expectations for continued growth and profitability.
Investors are keeping a close eye on Smithfield Foods as it navigates market dynamics and internal strategies to maintain its competitive edge in the packaged meats industry. The company’s financial health and future prospects remain a point of focus, with Goldman Sachs’ analysis suggesting a path of resilience and potential upside for the stock. With the next earnings report scheduled for May 28, 2025, InvestingPro subscribers can access comprehensive analysis, including detailed Fair Value calculations and over 30 additional financial metrics not covered in this article.
In other recent news, Smithfield Foods reported notable financial achievements for fiscal year 2024, with a significant increase in adjusted operating profit and net income. The company reported an adjusted operating profit of over $1 billion, up from $258 million in 2023, and an adjusted earnings per share (EPS) of $1.88, compared to $0.35 the previous year. Despite a 3% decline in sales to $14.1 billion, Smithfield Foods remains optimistic about its growth prospects, with expectations of low to mid-single digit sales growth in 2025. The company’s packaged meats segment delivered a record operating profit of $1.1 billion, marking a 6% increase from the previous year. Looking forward, Smithfield Foods anticipates its packaged meats segment to generate operating profits between $1.050 and $1.150 billion in 2025. Additionally, the fresh pork segment is expected to contribute $150 to $250 million, while hog production may range from a loss of $50 million to a profit of $50 million. The company continues to focus on operational efficiencies and product innovation to drive future growth.
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