Smithfield Foods, Inc. (SFD) Earnings & Analysis

Latest quarter

Smithfield reported Q3 FY2026 revenue of $3.4 billion, down from $3.7 billion a year earlier. Adjusted earnings per share, as counted by the consensus, were $0.26, above the $0.25 consensus estimate. Diluted earnings per share fell to $0.23 from $0.63.

CFO Mark Hall said packaged meats sales fell as lower average prices more than offset volume growth. The filing attributed the price decline largely to lower raw material costs. Hall said packaged meats operating profit rose to $230 million, while fresh pork recorded an $89 million operating loss and hog production operating profit fell to $34 million from $89 million.

The filing attributed lower fresh pork sales to softer domestic demand and a global oversupply of pork. Smithfield’s gross margin declined to 9.11% from 12.8%, and its operating margin fell to 3.70% from 8.27%. Free cash flow was $45.0 million, compared with −$75.0 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Shane Smith said inflation, high gas prices and reduced SNAP benefits had pressured consumers and consumption. He added that growing pork supply in Mexico and China, along with tariffs, had reduced export opportunities. In response to an analyst’s question about the upstream businesses, Smith said the duration of the market pressure was uncertain.

CFO Mark Hall said fresh pork faced pressure on processing spreads and sales-channel margins. He said the industry processing spread was approximately 35% below the prior year and was “well below the level needed to cover processing costs.” Hall also said increased global pork availability made exports more competitive, particularly in Mexico and Asia.

Packaged Meats President Steve France told analysts that consumers remained cautious and selective, but continued to spend. He said Smithfield offered products across price points and was shifting its portfolio toward higher-margin, value-added products while investing in brands, innovation and productivity. Smith said third-quarter e-commerce volume grew 22.5% and Prime Fresh volume grew 17.9%.

Hall attributed packaged meats’ higher profit and margin to pricing, lower raw material costs, volume growth and product mix, which outweighed higher input costs and marketing investment. Smith said transportation costs remained high, while diesel and resin costs had risen during the quarter.

Looking ahead, Hall told an analyst that lower raw material costs should support packaged meats pricing and profitability in the fourth quarter, while consumer pressure and freight, diesel and resin inflation remained factors. He said the additional 53rd week falls after the holidays and is not equivalent to a normal fourth-quarter week. Smith said the new hog supply agreement should be reflected in next year’s numbers; he also said the company had closed its Nathan’s Famous acquisition, securing rights to the brand in perpetuity.

Guidance

Smithfield now expects FY2026 sales to decline by a low-single-digit percentage, rather than remain roughly flat, primarily because of lower pork values. Hall said the company expects adjusted operating profit of $900 million-$1 billion, with the reset driven by fresh pork and hog production.

Smithfield expects hog production adjusted operating results ranging from a $25 million loss to a $25 million profit, compared with its previous $75.0 million–$125.0 million range. For fresh pork, it expects a loss of $50 million to breakeven, versus its previous $180.0 million–$240.0 million range. Hall said Smithfield narrowed its packaged meats operating profit outlook to $1.09 billion-$1.14 billion, including approximately two months of Nathan’s Famous results.