Hormel Foods (HRL) AI Stock Analysis

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Hormel Foods

(NYSE:HRL)

69Neutral

Hormel Foods' overall stock score reflects its financial stability, strong cash flows, and debt-free balance sheet. While the company faces challenges with stagnant revenue growth and margin pressures, strategic initiatives and brand strength provide a positive outlook. The technical analysis suggests a cautious stance, while the valuation presents a fair price with an attractive dividend yield. The earnings call highlights both growth opportunities and challenges, contributing positively to the overall score.

Positive Factors

Cost savings program

HRL's 'Transformation & Modernization' program is expected to deliver significant cost savings that could positively impact the bottom line.

Turkey market recovery

Dissipating grain costs and rebounding turkey prices are improving margin structures, potentially leading to a recovery in turkey profits.

Negative Factors

Execution risk

Heightened execution risk is present as HRL aims to meet its ambitious FY26 profit goals amid current challenges.

Planters acquisition impact

The acquisition of Planters has been disappointing, worsened by supply chain disruptions, impacting HRL's financial results.

Profit declines

All three business segments are expected to post year-over-year profit declines due to tough comparisons and higher input costs.

Hormel Foods (HRL) vs. S&P 500 (SPY)

Market Cap

$16.03B

Dividend Yield3.92%

Average Volume (3M)2.98M

Price to Earnings (P/E)21.2

Beta (1Y)0.09

Revenue Growth-1.84%

EPS Growth-5.14%

CountryUS

Employees20,000

SectorConsumer Defensive

Sector Strength81

IndustryPackaged Foods

Share Statistics

EPS (TTM)0.35

Shares Outstanding549,912,500

10 Day Avg. Volume2,443,167

30 Day Avg. Volume2,984,702

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.18

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit9.39

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$33.00

Price Target Upside12.98% 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 Key Performance Indicators (KPIs)

Any

Revenue by Segment

Revenue by Segment
Analyzes income from different business units, highlighting which product lines or services drive growth and profitability, and where there may be opportunities or challenges.

Chart InsightsHormel Foods' US Retail segment shows a slight decline in recent quarters, reflecting broader market challenges. However, the US Foodservice segment demonstrates robust growth, supported by strong demand for premium prepared proteins. The earnings call highlights successful brand initiatives and a recovering Planters business, which are expected to bolster future performance. Despite international expansion, margin pressures from higher input costs and turkey supply chain issues pose risks. The Transform and Modernize initiative aims to enhance efficiencies, potentially offsetting these challenges and supporting long-term growth.

Data provided by:

Main Street Data

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

Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Positive

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.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
11.92B	12.11B	12.46B	11.39B	9.61B
	Gross Profit
2.02B	2.00B	2.16B	1.93B	1.83B
	EBIT
1.07B	1.07B	1.31B	1.12B	1.10B
	EBITDA
1.37B	1.31B	1.60B	1.40B	1.34B
	Net Income Common Stockholders
805.04M	793.57M	999.99M	908.84M	908.08M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
766.62M	753.20M	998.26M	634.69M	1.73B
	Total Assets
13.43B	13.45B	13.31B	12.70B	9.91B
	Total Debt
2.86B	3.31B	3.30B	3.32B	1.30B
	Net Debt
2.12B	2.57B	2.32B	2.71B	-410.68M
	Total Liabilities
5.43B	5.71B	5.77B	5.72B	3.48B
	Stockholders Equity
7.99B	7.73B	7.54B	6.98B	6.43B
Cash Flow		Free Cash Flow
1.01B	777.64M	857.28M	771.73M	760.52M
	Operating Cash Flow
1.27B	1.05B	1.13B	1.00B	1.13B
	Investing Cash Flow
-236.91M	-689.54M	-258.04M	-3.63B	-656.32M
	Financing Cash Flow
-1.03B	-600.06M	-486.68M	1.52B	566.17M

Hormel Foods Technical Analysis

Technical Analysis Sentiment

Negative

Last Price29.21

Price Trends

50DMA

29.65

Negative

100DMA

29.75

Negative

200DMA

30.30

Negative

Market Momentum

MACD

-0.17

Positive

RSI

43.93

Neutral

STOCH

33.53

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 29.21 is below the 20-day moving average (MA) of 29.87, below the 50-day MA of 29.65, and below the 200-day MA of 30.30, indicating a bearish trend. The MACD of -0.17 indicates Positive momentum. The RSI at 43.93 is Neutral, neither overbought nor oversold. The STOCH value of 33.53 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
PPC	76 Outperform	$10.94B	9.22	36.53%	―	2.35%	145.82%
HRL	69 Neutral	$16.03B	21.20	9.54%	3.92%	-1.84%	-5.14%
CAG	68 Neutral	$11.15B	34.40	3.67%	6.06%	-3.15%	-65.38%
MKC	67 Neutral	$20.04B	25.85	14.73%	2.29%	0.40%	10.89%
CPB	66 Neutral	$10.59B	20.49	13.43%	4.30%	9.15%	-31.94%
Sector *	64 Neutral	$8.79B	14.77	5.05%	174.29%	3.63%	3.48%
SJM	59 Neutral	$12.08B	22.22	-3.55%	3.85%	7.07%	-181.54%

* Consumer Defensive Sector Average

Performance Comparison

HRL

Hormel Foods

29.21

-5.03

-14.69%

CPB

Campbell Soup

35.32

-9.31

-20.86%

CAG

Conagra Brands

23.09

-6.30

-21.44%

SJM

JM Smucker

111.54

-0.16

-0.14%

MKC

McCormick & Company

76.07

2.05

2.77%

PPC

Pilgrim's Pride

47.07

13.59

40.59%

Hormel Foods Earnings Call Summary

Earnings Call Date:Feb 27, 2025

(Q1-2025)

% Change Since: 2.64%|

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.

Q1-2025 Updates

Positive Updates

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.

Negative Updates

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.