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Hormel Foods Corp HRL

Morningstar Rating
$34.55 +3.75 (12.18%)
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Company Report

Hormel Faces Near-Term Headwinds That Will Weigh on Margin, but Restructuring Should Help Recovery

Hormel Foods has long been on U.S. shelves, with strong meat-centric brands like Jennie-O, Spam, Dinty Moore, and various Hormel-branded goods. These brands tend to hold number one or two share in their categories. To keep pace with evolving trends, Hormel has expanded its focus through acquisitions of non-meat protein brands like Skippy and Planters and branded meat products like Applegate. It has also entered ethnic and emerging food with Wholly Guacamole, Herdez, and Happy Little Plants. Concurrently, Hormel has reduced its commoditized farming footprint, increasingly relying on third-party farmers. Taken together, we think these moves stabilize its competitive standing and improve profitability in the competitive packaged food arena.

Price vs Fair Value

HRL is trading at a 1% discount.
Price
$30.83
Fair Value
$19.00
Uncertainty
Medium
1-Star Price
$91.54
5-Star Price
$83.60
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
$30.80
Day Range
$34.0535.98
52-Week Range
$28.5144.44
Bid/Ask
$34.55 / $34.56
Market Cap
$18.88 Bil
Volume/Avg
5.3 Mil / 3.2 Mil

Key Statistics

Price/Earnings (Normalized)
20.39
Price/Sales
1.40
Dividend Yield (Trailing)
3.59%
Dividend Yield (Forward)
3.67%
Total Yield
3.67%

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, 53% of fiscal 2022 sales were from perishable food, 27% from shelf-stable, 17% from poultry, and 3% from other products. 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
TSN
KHC
Price/Earnings (Normalized)
20.3946.0611.97
Price/Book Value
2.181.060.87
Price/Sales
1.400.361.65
Price/Cash Flow
14.4312.989.18
Price/Earnings
HRL
TSN
KHC

Financial Strength

Metric
HRL
TSN
KHC
Quick Ratio
0.680.610.44
Current Ratio
1.431.490.99
Interest Coverage
14.61−1.614.94
Quick Ratio
HRL
TSN
KHC

Profitability

Metric
HRL
TSN
KHC
Return on Assets (Normalized)
6.61%−0.20%4.06%
Return on Equity (Normalized)
11.53%−0.39%7.46%
Return on Invested Capital (Normalized)
8.47%0.84%6.27%
Return on Assets
HRL
TSN
KHC
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