Hormel Foods Corporation Just Beat EPS By 21%: Here's What Analysts Think Will Happen Next

Hormel Foods Corporation (NYSE:HRL) just released its quarterly report and things are looking bullish. The company beat forecasts, with revenue of US$3.0b, some 2.8% above estimates, and statutory earnings per share (EPS) coming in at US$0.40, 21% ahead of expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Hormel Foods

Following last week's earnings report, Hormel Foods' nine analysts are forecasting 2024 revenues to be US$12.3b, approximately in line with the last 12 months. Per-share earnings are expected to rise 7.5% to US$1.56. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$12.2b and earnings per share (EPS) of US$1.54 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of US$31.84, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Hormel Foods analyst has a price target of US$35.00 per share, while the most pessimistic values it at US$28.00. This is a very narrow spread of estimates, implying either that Hormel Foods is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Hormel Foods' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Hormel Foods' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 1.4% growth on an annualised basis. This is compared to a historical growth rate of 7.0% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.6% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Hormel Foods.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Hormel Foods analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Hormel Foods has 1 warning sign we think you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.