DB:HO7

Stock Analysis Report

Executive Summary

Hormel Foods Corporation produces and markets various meat and food products to retail, foodservice, deli, and commercial customers in the United States and internationally.

Rewards

Earnings are forecast to grow 2.47% per year

Pays a high and reliable dividend of 1.93%

Risk Analysis

No risks detected for HO7 from our risk checks.


Snowflake Analysis

Flawless balance sheet established dividend payer.


Similar Companies

Share Price & News

How has Hormel Foods's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: HO7 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

2.0%

HO7

0.5%

DE Food

0.2%

DE Market


1 Year Return

17.6%

HO7

12.0%

DE Food

14.4%

DE Market

Return vs Industry: HO7 exceeded the German Food industry which returned 11.3% over the past year.

Return vs Market: HO7 exceeded the German Market which returned 14.1% over the past year.


Shareholder returns

HO7IndustryMarket
7 Day2.0%0.5%0.2%
30 Day7.5%8.0%0.9%
90 Day16.0%13.4%4.6%
1 Year20.0%17.6%13.9%12.0%17.9%14.4%
3 Year33.3%25.3%-13.5%-19.0%15.7%5.6%
5 Year88.9%72.0%34.3%22.5%23.4%6.5%

Price Volatility Vs. Market

How volatile is Hormel Foods's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Hormel Foods undervalued compared to its fair value and its price relative to the market?

26.36x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: HO7 (€44.5) is trading above our estimate of fair value (€38.54)

Significantly Below Fair Value: HO7 is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: HO7 is poor value based on its PE Ratio (26.4x) compared to the Food industry average (22.6x).

PE vs Market: HO7 is poor value based on its PE Ratio (26.4x) compared to the German market (20.9x).


Price to Earnings Growth Ratio

PEG Ratio: HO7 is poor value based on its PEG Ratio (10.7x)


Price to Book Ratio

PB vs Industry: HO7 is overvalued based on its PB Ratio (4.4x) compared to the DE Food industry average (2x).


Next Steps

Future Growth

How is Hormel Foods forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

2.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: HO7's forecast earnings growth (2.5% per year) is above the savings rate (-0.4%).

Earnings vs Market: HO7's earnings (2.5% per year) are forecast to grow slower than the German market (13.3% per year).

High Growth Earnings: HO7's earnings are forecast to grow, but not significantly.

Revenue vs Market: HO7's revenue (2.6% per year) is forecast to grow slower than the German market (5% per year).

High Growth Revenue: HO7's revenue (2.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: HO7's Return on Equity is forecast to be low in 3 years time (15.2%).


Next Steps

Past Performance

How has Hormel Foods performed over the past 5 years?

9.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: HO7 has high quality earnings.

Growing Profit Margin: HO7's current net profit margins (10.3%) are lower than last year (10.6%).


Past Earnings Growth Analysis

Earnings Trend: HO7's earnings have grown by 9.5% per year over the past 5 years.

Accelerating Growth: HO7's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: HO7 had negative earnings growth (-3.2%) over the past year, making it difficult to compare to the Food industry average (8.3%).


Return on Equity

High ROE: HO7's Return on Equity (16.5%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Hormel Foods's financial position?


Financial Position Analysis

Short Term Liabilities: HO7's short term assets ($2.4B) exceed its short term liabilities ($1.1B).

Long Term Liabilities: HO7's short term assets ($2.4B) exceed its long term liabilities ($1.1B).


Debt to Equity History and Analysis

Debt Level: HO7's debt to equity ratio (4.2%) is considered satisfactory.

Reducing Debt: HO7's debt to equity ratio has reduced from 6.9% to 4.2% over the past 5 years.

Debt Coverage: HO7's debt is well covered by operating cash flow (369.2%).

Interest Coverage: HO7 earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: HO7 has a high level of physical assets or inventory.

Debt Coverage by Assets: HO7's debt is covered by short term assets (assets are 9.4x debt).


Next Steps

Dividend

What is Hormel Foods's current dividend yield, its reliability and sustainability?

1.93%

Current Dividend Yield


Dividend Yield vs Market

company1.9%marketbottom25%1.3%markettop25%3.6%industryaverage1.4%forecastin3Years2.0%

Current dividend yield vs market & industry

Notable Dividend: HO7's dividend (1.93%) is higher than the bottom 25% of dividend payers in the German market (1.31%).

High Dividend: HO7's dividend (1.93%) is low compared to the top 25% of dividend payers in the German market (3.57%).


Stability and Growth of Payments

Stable Dividend: HO7's dividends per share have been stable in the past 10 years.

Growing Dividend: HO7's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (45.9%), HO7's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: HO7's dividends in 3 years are forecast to be covered by earnings (54.1% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

4.1yrs

Average management tenure


CEO

Jim Snee (52yo)

3.3yrs

Tenure

US$8,324,267

Compensation

Mr. James P. Snee, also known as Jim, has been the Chief Executive Officer of Hormel Foods Corporation from October 31, 2016 to November 19, 2017 and its President from October 26, 2015 to November 19, 201 ...


CEO Compensation Analysis

Compensation vs Market: Jim's total compensation ($USD8.32M) is above average for companies of similar size in the German market ($USD4.36M).

Compensation vs Earnings: Jim's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
James Snee
Chairman3.3yrsUS$8.32m0.034% $8.1m
James Sheehan
Executive VP & CFO3.3yrsUS$2.96m0.029% $6.9m
Glenn Leitch
Executive Vice President of Supply Chain2.2yrsUS$2.55m0.017% $4.0m
James Splinter
Group Vice President of Corporate Strategy16.7yrsUS$2.27m0.024% $5.6m
Nathan Annis
Director of Investor Relations0yrsno datano data
Lori Marco
Senior VP of External Affairs & General Counsel9.1yrsno data0.0083% $2.0m
Wendy Watkins
Vice President of Corporate Communications4.9yrsno datano data
Fred Halvin
Vice President of Corporate Development7.3yrsno datano data
Janet Hogan
Senior Vice President of Human Resources2.9yrsno data0.00098% $234.3k
Larry Vorpahl
Group VP & President of Hormel Foods International Corporation0yrsno data0.026% $6.3m

4.1yrs

Average Tenure

56yo

Average Age

Experienced Management: HO7's management team is considered experienced (4.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
James Snee
Chairman3.3yrsUS$8.32m0.034% $8.1m
Stephen Lacy
Independent Director8.4yrsUS$279.52k0.011% $2.5m
Terrell Crews
Independent Director12.3yrsUS$279.32k0.019% $4.5m
Dakota Pippins
Independent Director19.1yrsUS$271.61k0.017% $4.1m
Susan Nestegard
Independent Director10.3yrsUS$260.70k0.018% $4.2m
Sally Smith
Independent Director5.6yrsUS$268.25k0.0080% $1.9m
Christopher Policinski
Lead Director3.4yrsUS$295.08k0.012% $3.0m
Gary Bhojwani
Independent Director5.6yrsUS$256.52k0.0059% $1.4m
Elsa Murano
Independent Director13.4yrsUS$247.02k0.019% $4.5m
Steven White
Independent Director5.6yrsUS$255.21k0.0081% $1.9m

7.0yrs

Average Tenure

60yo

Average Age

Experienced Board: HO7's board of directors are considered experienced (7 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: HO7 insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Hormel Foods Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Hormel Foods Corporation
  • Ticker: HO7
  • Exchange: DB
  • Founded: 1891
  • Industry: Packaged Foods and Meats
  • Sector: Food, Beverage & Tobacco
  • Market Cap: US$25.806b
  • Listing Market Cap: US$23.904b
  • Shares outstanding: 534.74m
  • Website: https://www.hormelfoods.com

Number of Employees


Location

  • Hormel Foods Corporation
  • 1 Hormel Place
  • Austin
  • Minnesota
  • 55912
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
HRLNYSE (New York Stock Exchange)YesCommon StockUSUSDJan 1968
HO7DB (Deutsche Boerse AG)YesCommon StockDEEURJan 1968
0J5ZLSE (London Stock Exchange)YesCommon StockGBUSDJan 1968
HRLWBAG (Wiener Boerse AG)YesCommon StockATEURJan 1968
H1RL34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH REPR 1 COMBRBRLDec 2019

Biography

Hormel Foods Corporation produces and markets various meat 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 offers various perishable meat products, including fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamoles, and bacons; and shelf-stable products, such as canned luncheon meats, peanut butters, chilies, shelf-stable microwaveable meals, hashes, stews, meat spreads, flour and corn tortillas, salsas, tortilla chips, and other products. The company also provides turkey products; nutritional food products and supplements; dessert and drink mixes; and industrial gelatin products. It sells its products under the SKIPPY, SPAM, Hormel, Natural Choice, Applegate, Justin's, Wholly, Hormel, Black Label, Columbus, etc. brand names through sales personnel, as well as through 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. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/19 22:01
End of Day Share Price2020/02/19 00:00
Earnings2019/10/27
Annual Earnings2019/10/27


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.