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Hormel Foods (HRL)
NYSE:HRL
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Hormel Foods
(NYSE:HRL)
69Neutral
Positive Factors
Cost Savings
The 'Transformation & Modernization' program is anticipated to result in significant cost savings.
Financial Performance
Improved fundamentals in the Jennie-O Turkey segment and a growing core Pork business are expected to boost profits.
Negative Factors
Leadership Changes
The upcoming retirement of CEO Jim Snee and potential rebasing of aggressive targets raise uncertainties.
Profitability Challenges
All three segments are expected to see year-over-year profit declines due to tough snack nuts comparisons and higher input costs.
Supply Chain Issues
Supply chain disruptions have negatively impacted Planters' performance and are a concern for future quarters.
Hormel Foods (HRL) vs. S&P 500 (SPY)
Market Cap
$16.33B
Dividend Yield3.77%
Average Volume (3M)3.24M
Price to Earnings (P/E)21.9
Beta (1Y)0.10
Revenue Growth-1.84%
EPS Growth-5.14%
CountryUS
Employees20,000
SectorConsumer Defensive
Sector Strength91
IndustryPackaged Foods
Share Statistics
EPS (TTM)1.38
Shares Outstanding549,912,500
10 Day Avg. Volume2,854,142
30 Day Avg. Volume3,236,578
Financial Highlights & Ratios
PEG Ratio17.79
Price to Book (P/B)N/A
Price to Sales (P/S)1.38
Price to Cash Flow (P/CF)13.30
P/FCF Ratio13.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$33.00Price Target Upside11.11% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Hormel Foods Business Overview & Revenue Model
Company DescriptionHormel Foods Corporation develops, processes, and distributes various meat, nuts, and food products to retail, foodservice, deli, and commercial customers in the United States and internationally. The company operates through four segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other. It provides various perishable products that include fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamoles, and bacons; and shelf-stable products comprising canned luncheon meats, nut butters, snack nuts, chilies, shelf-stable microwaveable meals, hashes, stews, tortillas, salsas, tortilla chips, and others. The company also engages in the processing, marketing, and sale of branded and unbranded pork, beef, poultry, and turkey products, as well as offers nutritional food products and supplements, desserts and drink mixes, and industrial gelatin products. It sells its products primarily under the SKIPPY, SPAM, Hormel, Natural Choice, Applegate, Justin's, Jennie-O, Café H, Herdez, Black Label, Sadler's, Columbus, Gatherings, Herdez, Wholly, Columbus, Planters, NUT-rition, Planters Cheez Balls, Corn Nuts, etc. brand names through sales personnel, independent brokers, and distributors. The company was formerly known as Geo. A. Hormel & Company and changed its name to Hormel Foods Corporation in January 1995. Hormel Foods Corporation was founded in 1891 and is headquartered in Austin, Minnesota.
How the Company Makes MoneyHormel Foods generates revenue through the sale of its extensive range of food products across various channels. The company operates primarily through two segments: Refrigerated Foods and Grocery Products. The Refrigerated Foods segment includes the sale of perishable meat and food products to retailers, foodservice operators, and deli customers. The Grocery Products segment focuses on shelf-stable products sold primarily through retail channels. Hormel Foods also benefits from strategic acquisitions, such as the purchase of popular brands that enhance its product portfolio and market reach. Additionally, the company engages in partnerships and collaborations to expand distribution and drive growth. Hormel Foods leverages its strong brand portfolio and extensive distribution network to maintain a competitive edge and achieve consistent revenue growth.
Hormel Foods Financial Statement Overview
Summary
Hormel Foods demonstrates financial stability with strong cash flows and a debt-free balance sheet. Profitability is stable, though revenue growth has been flat, which could pose a challenge for future expansion. The firm’s solid cash position and efficient equity utilization provide a strong foundation, though increasing profit margins could enhance overall financial performance.Income Statement
The income statement reveals stable performance with a gross profit margin of 16.7% and a net profit margin of 6.3% in the TTM (Trailing-Twelve-Months). Revenue growth is stagnant, as shown by a slight decrease of 0.1% from the previous period. The EBIT margin stands at 8.5%, indicating moderate efficiency in generating operating income. Profitability appears stable, though growth is limited.65
Positive
Balance Sheet
The balance sheet is strong, characterized by zero total debt, providing excellent financial stability and low risk. The equity ratio is high at 85.6%, suggesting significant asset backing by equity. Return on equity is healthy at 6.6%, indicating efficient use of equity to generate profits, although there is room for improvement in profitability.72
Positive
Cash Flow
Cash flow analysis shows robust performance with a free cash flow of $890.6 million in the TTM, demonstrating strong cash generation. The operating cash flow to net income ratio is 1.5, highlighting effective cash conversion from earnings. The free cash flow to net income ratio is 1.2, indicating solid cash flow relative to profits, supporting sustainability and potential for growth.78
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 11.91B | 11.92B | 12.11B | 12.46B | 11.39B | 9.61B | Gross Profit |
| 1.99B | 2.02B | 2.00B | 2.16B | 1.93B | 1.83B | EBIT |
| 1.01B | 1.07B | 1.07B | 1.31B | 1.12B | 1.10B | EBITDA |
| 1.31B | 1.37B | 1.31B | 1.60B | 1.40B | 1.34B | Net Income Common Stockholders |
| 756.75M | 805.04M | 793.57M | 999.99M | 908.84M | 908.08M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 866.41M | 766.62M | 753.20M | 998.26M | 634.69M | 1.73B | Total Assets |
| 13.40B | 13.43B | 13.45B | 13.31B | 12.70B | 9.91B | Total Debt |
| 2.86B | 2.86B | 3.31B | 3.30B | 3.32B | 1.30B | Net Debt |
| 2.02B | 2.12B | 2.57B | 2.32B | 2.71B | -410.68M | Total Liabilities |
| 5.37B | 5.43B | 5.71B | 5.77B | 5.72B | 3.48B | Stockholders Equity |
| 8.03B | 7.99B | 7.73B | 7.54B | 6.98B | 6.43B |
| Cash Flow | Free Cash Flow | ||||
| 890.57M | 1.01B | 777.64M | 857.28M | 771.73M | 760.52M | Operating Cash Flow |
| 1.17B | 1.27B | 1.05B | 1.13B | 1.00B | 1.13B | Investing Cash Flow |
| -242.86M | -236.91M | -689.54M | -258.04M | -3.63B | -656.32M | Financing Cash Flow |
| -1.05B | -1.03B | -600.06M | -486.68M | 1.52B | 566.17M |
Hormel Foods Technical Analysis
Negative
29.70
Price Trends
29.48
Positive
30.02
Negative
30.35
Negative
Market Momentum
0.19
Positive
47.15
Neutral
48.51
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HRL, the sentiment is Negative. The current price of 29.7 is below the 20-day moving average (MA) of 30.20, above the 50-day MA of 29.48, and below the 200-day MA of 30.35, indicating a neutral trend. The MACD of 0.19 indicates Positive momentum. The RSI at 47.15 is Neutral, neither overbought nor oversold. The STOCH value of 48.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HRL.
Hormel Foods Risk Analysis
Hormel Foods disclosed 20 risk factors in its most recent earnings report. Hormel Foods reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Hormel Foods Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $12.71B | 11.72 | 28.70% | ― | 2.93% | 237.51% | |
69 Neutral | $16.33B | 21.91 | 9.54% | 3.77% | -1.84% | -5.14% | |
69 Neutral | $19.99B | 25.75 | 14.73% | 2.28% | 0.40% | 10.89% | |
68 Neutral | $12.50B | 38.32 | 3.67% | 5.62% | -3.15% | -65.38% | |
66 Neutral | $11.37B | 21.97 | 13.43% | 4.13% | 9.15% | -31.94% | |
64 Neutral | $9.21B | 14.61 | 4.29% | 186.43% | 3.98% | 5.57% | |
61 Neutral | $12.34B | 22.22 | -3.55% | 3.72% | 7.07% | -181.54% |
* Consumer Defensive Sector Average
Performance Comparison
HRL
Hormel Foods
29.70
-4.41
-12.93%
CPB
Campbell Soup
36.29
-7.08
-16.32%
CAG
Conagra Brands
24.45
-5.36
-17.98%
SJM
JM Smucker
115.23
4.91
4.45%
MKC
McCormick & Company
74.54
-0.02
-0.03%
PPC
Pilgrim's Pride
53.55
21.53
67.24%
Hormel Foods Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: 4.36% | Next Earnings Date: May 29, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with solid organic sales growth and successful brand initiatives offset by margin pressures and supply chain challenges. The Planters recovery and progress in the Transform and Modernize initiative are promising, but challenges in the turkey supply chain and higher input costs remain concerns.Highlights
Solid Top-Line Results
Hormel Foods achieved a 1% organic net sales increase in the first quarter, driven by strong performance in the value-added portfolio and leadership positions in the marketplace.
Successful Brand Initiatives
Significant growth in iconic brands like Spam, Applegate, and Hormel Black Label Bacon due to focused marketing campaigns and innovative product launches.
Planters Business Recovery
The Planters brand showed significant sequential recovery with improved fill rates, distribution gains, and accelerated innovation.
Food Service Segment Growth
Strong performance in the food service segment, with premium prepared proteins achieving a fifth consecutive quarter of double-digit net sales growth.
International Segment Expansion
Continued growth in the international segment, with strong performance from global brands like Spam and Skippy, especially in China.
Transform and Modernize Initiative Progress
The initiative is expected to deliver $100 million to $150 million in additional benefits in fiscal 2025, with a focus on generating growth through investments in various strategic areas.
Lowlights
Margin Pressures
Gross profit margin was 15.9%, impacted by higher commodity input costs, Planters recovery, and supply chain impacts of bird illnesses.
Turkey Supply Chain Challenges
Incremental headwinds due to turkey supply chain pressures from bird illnesses, requiring strategic pricing actions.
Higher SG&A Expenses
Adjusted SG&A expenses increased by 2.5%, mainly due to employee-related expenses.
Lower Investment Income
Decreased interest and investment income primarily due to lower performance from the Rabbi Trust.
Company Guidance
During the Hormel Foods Corporation's first quarter earnings call for fiscal 2025, the company highlighted several key metrics and strategic initiatives guiding its performance. Hormel reported net sales of $3 billion, representing a 1% organic increase over the previous year, despite challenging market conditions. The company's value-added portfolio continued to perform well, contributing to a gross profit margin of 15.9%. Hormel's strategic initiatives included a focus on flagship brands, such as Spam and Applegate, which drove volume and net sales growth. The Planters brand showed significant sequential recovery, with expectations of further improvement in the second half of the year. Hormel reaffirmed its full-year organic net sales growth outlook of 1% to 3% and adjusted diluted net earnings per share expectations of $1.58 to $1.72. The company's Transform and Modernize initiative is on track to deliver $100 million to $150 million in additional benefits for fiscal 2025, aiming to enhance operational efficiencies and support long-term growth.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.