Are Stock Prices Too Stiff?

Smithfield Foods makes ham, bacon, sausage--and so much money that shareholders have been squealing with delight. As profits rose sharply in 1991, Smithfield's share prices doubled. But investors who bought into this Virginia-based company in recent weeks, expecting that earnings would rise 10% over the year before as predicted by analysts, found themselves saddled with a pig in a poke. On Feb. 18, Smithfield stock slid 7% on the news that quarterly profits had fallen by nearly 30%.

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