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Hormel Foods Corp HRL

Morningstar Rating
$30.64 +0.16 (0.52%)
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Company Report

Hormel Earnings: Shares Fall to Our Fair Value Estimate as Turkey Weighs on Retail Results

Hormel shares were down 9% in May 30 trading after the narrow-moat company released fiscal second-quarter results, likely due to market worries about the year-over-year decline in the retail segment. Retail sales were down 7% and segment profit was down 14% as weakness in turkey and center-store convenient meals outweighed solid performance from branded offerings. The decline in retail—Hormel's largest segment by far—overshadowed solid performance from foodservice, which saw sales increase 3% and segment profit 7%. We think this is particularly impressive given the challenges that other out-of-home dining companies have experienced, though some of it may be due to Hormel's mix of foodservice customers, which underweights restaurants.

Price vs Fair Value

HRL is trading at a 895% premium.
Price
$30.48
Fair Value
$44.00
Uncertainty
Medium
1-Star Price
$24.38
5-Star Price
$73.60
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Hormel will reinvigorate Planters to regain the market share it hemorrhaged under previous ownership with its staunch focus on brand spending, boosting its ability to compete in the snack category.

Bears

Food is a competitive space (from other large manufacturers and smaller niche operators), and if Hormel ratchets back spending behind innovation and advertising, market share could erode.

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News

Trading Information

Previous Close Price
$30.48
Day Range
$30.4030.84
52-Week Range
$28.5141.73
Bid/Ask
$30.41 / $30.76
Market Cap
$16.80 Bil
Volume/Avg
3.8 Mil / 2.5 Mil

Key Statistics

Price/Earnings (Normalized)
20.30
Price/Sales
1.39
Dividend Yield (Trailing)
3.66%
Dividend Yield (Forward)
3.71%
Total Yield
3.66%

Company Profile

Historically meat-focused, Hormel Foods broadened its lineup to include other protein offerings and become a branded food company. The firm sells its wares through multiple channels, including U.S. retail (64% of fiscal 2023 sales), U.S. food service (30%), and international (6%). By product, 70% of fiscal 2023 sales were from perishable food and 30% from shelf-stable. Major brands include Hormel, Spam, Jennie-O, Columbus, Applegate, Planters, and Skippy. Many of these hold the number one or two market share in their respective categories.
Sector
Consumer Defensive
Industry
Packaged Foods
Stock Style Box
Mid Value
Total Number of Employees
20,000

Competitors

Valuation

Metric
HRL
KHC
00288
Price/Earnings (Normalized)
20.3010.9516.33
Price/Book Value
2.120.800.85
Price/Sales
1.391.510.32
Price/Cash Flow
14.298.385.16
Price/Earnings
HRL
KHC
00288

Financial Strength

Metric
HRL
KHC
00288
Quick Ratio
0.970.510.65
Current Ratio
1.731.091.64
Interest Coverage
13.344.9110.34
Quick Ratio
HRL
KHC
00288

Profitability

Metric
HRL
KHC
00288
Return on Assets (Normalized)
6.50%4.07%3.13%
Return on Equity (Normalized)
11.35%7.44%6.26%
Return on Invested Capital (Normalized)
8.17%6.23%4.90%
Return on Assets
HRL
KHC
00288
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