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HRL

Hormel Foods NYSE:HRL Stock Report

Last Price

US$48.91

Market Cap

US$26.7b

7D

-0.9%

1Y

7.5%

Updated

06 Aug, 2022

Data

Company Financials +
HRL fundamental analysis
Snowflake Score
Valuation2/6
Future Growth1/6
Past Performance3/6
Financial Health4/6
Dividends5/6

HRL Stock Overview

Hormel 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.

Hormel Foods Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Hormel Foods
Historical stock prices
Current Share PriceUS$48.91
52 Week HighUS$55.11
52 Week LowUS$40.48
Beta0.12
1 Month Change1.16%
3 Month Change-5.96%
1 Year Change7.54%
3 Year Change17.26%
5 Year Change43.81%
Change since IPO2,151.97%

Recent News & Updates

Aug 06
Does Hormel Foods (NYSE:HRL) Have A Healthy Balance Sheet?

Does Hormel Foods (NYSE:HRL) Have A Healthy Balance Sheet?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility...

Jul 29

Hormel Could Be A Safe Haven In Turbulent Markets

Hormel Foods has proven to be a safe haven for investors during times of low consumer confidence in the past 20 years. Although macroeconomic headwinds, including elevated commodity prices, may hurt HRL's business as well, we believe the firm is well-positioned to outperform the broader market. The safe and sustainable dividend could be attractive for dividend and dividend growth investors. According to the Gordon Growth Model, the firm appears to be fairly valued, with potential upside. We currently rate Hormel as "buy". Hormel Foods (HRL) has lost about 1% of its market value year-to-date, while the broader market has declined by more than 15% in the same time period. Data by YCharts In our opinion, HRL's outperformance is justified in the current market environment, however, before we can recommend investing at the current price levels, we have to make sure that the stock also appears attractive from a valuation perspective. In this article, we will take a look at what macroeconomic factors could improve and worsen HRL's financial performance in the near term. We will start our analysis by looking at the consumer sentiment, more precisely at how HRL and its stock has performed during times of low consumer confidence. Performance during times of low consumer confidence Before we start our analysis, let us briefly define what consumer confidence is and how it can potentially impact the financial performance of different type of companies in different sectors. Consumer confidence is often defined as a leading economic indicator, which is used to predict near-term changes in the spending behaviour of the consumer. A low or declining consumer confidence could be a signal that people are getting more and more reluctant to spend larger sums of money, as their financial outlook became more uncertain. Such a behaviour can result in a lower demand for durable, discretionary, non-essential items. Services may also be impacted as people are likely to cut spending on services by switching to lower-cost alternatives, if available and switching costs are low. On the other hand, firms in the consumer staples sector, especially in the packaged food industry are not expected to be severely affected, as the products they sell are considered to be essential. So how consumer confidence has actually developed in the United States recently? U.S. Consumer confidence (Tradingeconomics.com) Consumer confidence in the U.S. has been steadily declining over the past months, falling even below levels that were recorded during the 2008-2009 financial crisis. Although consumer spending has remained high in the first half of 2022, we expect the spending to slow in the second part of the year. But would it severely impact HRL's performance? We will look at three periods from the last 20 years, characterised by low consumer confidence, marked by the red circles on the chart above. 2001-2003 Data by YCharts 2007-2010 Data by YCharts 2011-2013 Data by YCharts In all three of these periods, HRL's stock substantially outperformed the broader market. While past performance is not always a good indicator of future behaviour, we believe that in the current macroeconomic environment, Hormel Foods is well-positioned to continue its outperformance as already seen in the first half of the year. Although HRL appears to be quite attractive from this perspective in light of the current macroeconomic environment, we have to understand what other macroeconomic factors could impact the firm. Consumer confidence is however not the only macroeconomic factor that could share HRL's financial performance in the near term. Commodity prices are also likely to have material impact on the performance of the business. Commodity price impact Energy prices have been rising throughout 2022, but they have skyrocketed in the first quarter of 2022, as the geopolitical tension between Russia and Ukraine unfolded. Crude oil price (Tradingeconomics.com) Although the oil price seems to have peaked in the past months, the price remains elevated compared to the levels seen between 2015 and 2021. Due to the high uncertainty in the Eastern European region, we expect energy prices to remain elevated for the rest of the year. High oil prices have been causing a downward pressure on the margins of many firms due to elevated input costs and higher freight costs. Hormel Foods is not expected to be an exception, and we expect the headwinds will remain for the rest of the year. Aluminium prices also often play a big role for firms in the packaged food industry. Fortunately, for these firms, aluminium prices have fallen significantly since their peak in early 2022. If the decline continues, this could have a positive impact on the margins. Aluminium prices (Tradingeconomics.com) All in all, the macroeconomic environment remains uncertain, together with the prices of commodities. While HRL has performed historically well during times of low consumer confidence, the question is, is it the right price to pay for HRL? To answer this question, now we will take a look at the firm from a valuation point of view, using the Gordon Growth Model. Valuation Gordon Growth Model The Gordon Growth Model is a simple dividend that can be applied to estimate the intrinsic value of dividend paying companies. The main assumption of this model is that the dividend grows indefinitely at a constant rate. Due to this criterion, the growth model is particularly appropriate for firms that are: 1.) Paying dividends 2.) In the mature growth phase 3.) Relatively insensitive to the business cycle A strong track record of steadily increasing dividend payments at a stable growth rate could also serve as a practical criterion if the trend is expected to continue in the future. Dividend history (Seekingalpha.com) As Hormel has been paying dividends for the last 56 years and it has grown its dividends consistently in the last 26 years, we believe the GGM is a suitable valuation method to apply for this firm. To come up with a useful estimate of the potential fair value of HRL's stock, we have to make two key assumptions: 1.) What is our required rate of return? We decided to use HRL's weighted-average cost of capital (WACC) for our required rate of return. The current WACC of the firm is between 5.75% and 6.75%. WACC (finbox.com) To stay on the conservative end of the scale, we will be using 6.5% for our evaluation. 2.) What could be a reasonable constant dividend growth rate in perpetuity? To answer this question, we need to take another look at Hormel's dividend payment history and try to establish a reasonable long-term trend. Dividend growth (seekingalpha.com) Although the firm has been growing its dividends at a rapid rate in recent years, we believe a growth rate in the range of 10% is not a sustainable growth rate in perpetuity.

Jul 21

Hormel Foods: A Consistent Performer That Rewards Its Shareholders

Hormel Foods is a Dividend King with 56 consecutive years of dividend growth. Shares currently yield 2.20%. Hormel Foods has spent much of the last decade transitioning their business to provide healthier options for consumers. In Q2 FY 2022, Hormel Foods showed a strong ability to pass on price increases to combat inflationary pressures. Hormel Foods is a defensive, all-weather business. Hormel Foods (HRL) is much more than their well-known packaged meats and of course the iconic SPAM and Hormel Brand Chili. Hormel has spent much of the last decade transforming their business into healthier food options including Justin's Nut Butter, Wholly Guacamole, Jennie-O turkey, and most recently acquired the Planters nut business. That transition has served the business, and investors, well as it's led to some higher growth and higher margin subsidiaries coming into the fold. As consumers continue to search out healthier alternatives, Hormel is now positioned to continue to serve their customers. Many consumer staples and consumer packaged goods companies have struggled with inflationary pressures. However, Hormel has combated that quite well with continued revenue growth that was driven largely from increased pricing. That led to Q2 sales showing an impressive 19% increase year-over-year with operating margins seeing just slight compression over that time. Hormel reached a new all-time high back in April of this year; however, since then shares have pulled back nearly 14%. Hormel is a wonderful, defensive business that can allow investors to have a strong ballast to their portfolio compared to the high-flyers, and sometimes fast-fallers. Dividend History The majority of my capital is invested in dividend growth stocks. The dividend growth strategy appealed to me when I began my investment journey because the concept is simple: find quality businesses that have a history of paying and growing the dividend, focus on the underlying business, and don't pay too much for it. Hormel Foods Dividend History (Hormel Foods Investor Relations) Hormel is a Dividend King with 56 consecutive years of dividend growth. That's a period of time that covers all sorts of economic booms and busts as well as market crashes and far too many geopolitical issues to count. Yet every year for over half a century, Hormel has been a steady hand rewarding owners with higher dividends. Since 1990 Hormel's year over year dividend growth has ranged between 2.6% to 25.0% with an average of 11.6% and a median of 10.7%. Over that same time there's been 28 rolling 5-year periods with Hormel's annualized dividend growth spanning from 3.9% to 18.9% with an average of 11.4% and a median of 11.2%. There's also been 23 rolling 10-year periods with annualized dividend growth coming in between 6.0% and 16.3% with an average of 11.1% and a median of 10.7%. The rolling 1-, 3-, 5-, and 10-year annualized dividend growth rates from Hormel since 1990 can be found in the following table. Year Annual Dividend 1 Year DGR 3 Year DGR 5 Year DGR 10 Year DGR 1990 $0.032 1991 $0.038 16.0% 1992 $0.045 20.2% 1993 $0.055 22.1% 19.4% 1994 $0.062 13.0% 18.4% 1995 $0.072 16.0% 17.0% 17.4% 1996 $0.075 3.9% 10.9% 14.9% 1997 $0.078 3.2% 7.5% 11.4% 1998 $0.080 3.1% 3.4% 7.7% 1999 $0.082 3.0% 3.1% 5.7% 2000 $0.088 6.3% 4.1% 3.9% 10.5% 2001 $0.092 5.5% 4.9% 4.2% 9.4% 2002 $0.098 5.6% 5.8% 4.7% 8.0% 2003 $0.105 7.8% 6.3% 5.6% 6.7% 2004 $0.112 6.8% 6.7% 6.4% 6.1% 2005 $0.130 15.7% 10.0% 8.2% 6.0% 2006 $0.140 7.7% 10.0% 8.7% 6.4% 2007 $0.150 7.1% 10.1% 9.0% 6.8% 2008 $0.185 23.5% 12.5% 12.0% 8.8% 2009 $0.190 2.6% 10.7% 11.1% 8.7% 2010 $0.210 10.7% 11.9% 10.1% 9.2% 2011 $0.255 21.3% 11.3% 12.8% 10.7% 2012 $0.300 17.6% 16.4% 14.9% 11.9% 2013 $0.340 13.3% 17.3% 12.9% 12.4% 2014 $0.400 17.6% 16.2% 16.1% 13.5% 2015 $0.500 25.0% 18.6% 18.9% 14.4% 2016 $0.580 16.0% 19.5% 17.8% 15.3% 2017 $0.680 17.2% 19.3% 17.8% 16.3% 2018 $0.750 10.3% 14.5% 17.1% 15.0% 2019 $0.840 12.0% 13.1% 16.0% 16.0% 2020 $0.930 10.7% 11.0% 13.2% 16.0% 2021 $0.980 5.4% 9.3% 11.1% 14.4% 2022 $1.040 6.1% 7.4% 8.9% 13.2% Source: Author; Data Source: Hormel Foods Investor Relations The dividend payout ratio is a quick way to measure to measure the sustainability of a dividend by comparing the dividend payment versus either profits or cash flow. All else being equal a lower dividend payout ratio is better as it allows more room for the inevitable business specific issues without jeopardizing the dividend while also allowing more potential room for future growth. HRL Dividend Payout Ratios (HRL SEC filings) Hormel's payout ratio has clearly been on the rise over the last decade meaning that the dividend has grown faster than the growth in underlying profits or free cash flow. The 10-year average net income payout ratio is 40.2% with the 5-year average at 47.0%. Similarly, the average free cash flow payout ratios are 46.7% and 58.2%, respectively. Quantitative Quality A lengthy dividend growth history is just one metric that I like to see from the businesses that I invest in. There's several other financial metrics that I track to see how the business is performing over time and whether I believe it's sustainable. HRL Revenue Profits and Cash Flow (HRL SEC filings) Over the last decade Hormel has managed to grow revenues by 38.3% in total or 3.7% annualized. That growth came through organic means as well as through various acquisitions. Gross profits improved by 44.7% or 4.2% annualized. Similarly, Hormel's operating profits increased by 46.8% or 4.4% annualized; however, operating cash flow showed dramatic improvement rising by 93.4% or 7.6% annualized. Free cash flow outpaced the others increasing by 99.5% or 8.0% annualized. A quality business should be able to show at a minimum stable margins over time. I typically look for free cash flow margins that are greater than 10% as a sign of a strong cash generating enterprise. HRL Margins and CCR (HRL SEC filings) Hormel showed steady improvements in their gross margin in the first half of the decade; however, it has essentially round-tripped back to where it began over the second half. The 10-year average gross margin for Hormel is 19.0% with the 5-year average at 19.7%. While Hormel's free cash flow margins have retreated they still show solid improvement over the last decade. The 10-year average free cash flow margin is 7.3% with the 5-year average coming to 7.8%. Unfortunately, Hormel's free cash flow margin hasn't reached the 10% level that I like to see even once over the last decade. While the free cash flow margin lets you know how much of each dollar of sales is turned into free cash flow, I also track how efficient the business is at generating free cash flow from its assets and capital base. Once again I expect a quality business to show stale or rising returns over time and want to see free cash flow returns on invested capital greater than 10%. HRL Free Cash Flow Returns (HRL SEC filings) That's not exactly the best looking return profile for Hormel with each metric trending poorly since 2015. However, Hormel has surpassed the 10% FCF ROIC level in every year save for 2021 during the last decade. The 10-year average FCF ROIC is 13.2% with the 5-year average coming to 12.9%. To understand how Hormel uses its free cash flow, I calculate three variations of the metric, defined below: Free Cash Flow, FCF: Operating cash flow less capital expenditures Free Cash Flow after Dividend, FCFaD: FCF less total cash dividend payments Free Cash Flow after Dividend and Buybacks, FCFaDB: FCFaD less net cash used on share repurchases HRL Free Cash Flows (HRL SEC filings) Over the last decade, Hormel's business has generated $6.9 B in FCF while sending $3.3 B to owners via dividends. That puts the cumulative FCFaD at a healthy $3.6 B. While Hormel has used share repurchases, they have not been a preferred means to return additional cash to owners. Over the last decade Hormel has spent a net total of just $0.3 B on buybacks putting the cumulative FCFaDB at $3.3 B. If a company has excess free cash flow after paying their dividend, my preference would be for special dividends or a higher baseline dividend payment; however, I realize that share buybacks will be the likely use for that cash flow. HRL Shares Outstanding (HRL SEC Filings) Hormel has not typically been a serial share repurchaser spending over $11 on dividends for every $1 of net buybacks during the last decade. Their share count has actually shown a slight rise over that time increasing by a total of 1.9%. As an investor in the equity of a business, I want to make sure that the balance sheet is not overburdened with debt. While I prefer no debt as it introduces potential risks, I also realize that most companies will carry some amount of debt. HRL Debt to Capitalization Ratio (HRL SEC filings) Hormel has typically eschewed much debt financing while carrying a very strong balance sheet. The 10-year average debt-to-capitalization ratio works out just 11% with the 5-year average coming to just 12%. The Planters acquisition completed last year did substantially increase the debt-to-capitalization ratio; however, it's still at very conservative levels. In conjunction with the debt-to-capitalization ratio I also track the net debt ratios to get a better idea of how burdensome the debt load is. The net debt ratios compare the net debt versus some measure of profits or cash flow. They let you know how quickly the business could de-lever assuming no major changes to the underlying business. HRL Debt Ratios and Interest Coverage (HRL SEC filings) Reinforcing the prudent use of leverage by Hormel is the low overall net debt ratios. In 6 of the last 10 years Hormel carried more cash than total debt which is very conservative. Even after the Planters acquisition introduced a relatively hefty amount of debt, Hormel's net debt ratios still appear very manageable and I expect them to trend back down towards even more conservative levels. The 10-year average net debt-to-EBITDA, net debt-to-operating income, and net debt-to-FCF ratios are 0.1x for each metric. The 5-year averages work out to 0.1x, 0.2x, and 0.2x. Similarly, the interest coverage ratio, while declining, is still more than adequate at over 26x for FY 2021. Valuation When trying to value an investment I employ several valuation methods that in an attempt value the business from different perspectives. The methods that I utilize are dividend yield theory, a reverse discounted cash flow analysis, and a minimum acceptable rate of return, "MARR", analysis. Analysts expect Hormel to report FY 2022 EPS of $1.86 with FY 2023 EPS of $2.04. They also expect Hormel to be able to achieve 8.6% annual EPS growth over the next 5 years. I then assumed that Hormel would be able to sustain EPS growth of 5.0% annually for the following 5 years. Dividends are assumed to target a 55% payout ratio. We also need to determine what we could expect for potential terminal or exit multiples in order to determine the value of the business at some future date in order to complete the MARR analysis. Over the last decade Hormel has typically been valued between approximately 15x to 30x with a longer run multiple in the 20x to 25x range. Data by YCharts The following table shows the potential internal rates of return that an investment in Hormel could generate provided the assumptions listed above prove to be reasonable forecasts for how the future plays out. Returns assume a purchase price of $47.22, Wednesday's closing price. Dividends are assumed to be paid in cash and follow Hormel's historic payment and increase schedule. IRR P/E Level 5 Year 10 Year 30 15.5% 11.0% 25 11.0% 9.1% 22.5 8.5% 8.0% 20 5.9% 6.8% 17.5 2.9% 5.5% 15 -0.4% 4.0% Source: Author Alternatively, I use the framework developed for the MARR analysis to determine what price I could pay for shares today in order to generate the returns that I desire from my investments. My standard hurdle rate is a 10% IRR and for Hormel I'll also examine 12% and 8% return targets. Purchase Price Targets 10% Return Target 12% Return Target 8% Return Target P/E Level 5 Year 10 Year 5 Year 10 Year 5 Year 10 Year 30 $59 $52 $55 $45 $64 $61 25 $50 $45 $47 $39 $54 $53 22.5 $46 $41 $43 $36 $49 $48 20 $41 $38 $38 $33 $44 $44 17.5 $36 $34 $34 $30 $39 $40 15 $32 $31 $30 $27 $34 $35

Shareholder Returns

HRLUS FoodUS Market
7D-0.9%0.7%1.0%
1Y7.5%6.9%-12.9%

Return vs Industry: HRL matched the US Food industry which returned 6.9% over the past year.

Return vs Market: HRL exceeded the US Market which returned -12.8% over the past year.

Price Volatility

Is HRL's price volatile compared to industry and market?
HRL volatility
HRL Average Weekly Movement3.5%
Food Industry Average Movement6.1%
Market Average Movement7.9%
10% most volatile stocks in US Market17.1%
10% least volatile stocks in US Market3.2%

Stable Share Price: HRL is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: HRL's weekly volatility (4%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
189120,000Jim Sneehttps://www.hormelfoods.com

Hormel 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.

Hormel Foods Fundamentals Summary

How do Hormel Foods's earnings and revenue compare to its market cap?
HRL fundamental statistics
Market CapUS$26.71b
Earnings (TTM)US$959.84m
Revenue (TTM)US$12.46b

27.8x

P/E Ratio

2.1x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
HRL income statement (TTM)
RevenueUS$12.46b
Cost of RevenueUS$10.33b
Gross ProfitUS$2.13b
Other ExpensesUS$1.17b
EarningsUS$959.84m

Last Reported Earnings

May 01, 2022

Next Earnings Date

n/a

Earnings per share (EPS)1.76
Gross Margin17.08%
Net Profit Margin7.70%
Debt/Equity Ratio44.6%

How did HRL perform over the long term?

See historical performance and comparison

Dividends

2.1%

Current Dividend Yield

57%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is HRL undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for HRL?

Other financial metrics that can be useful for relative valuation.

HRL key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue2.3x
Enterprise Value/EBITDA19.4x
PEG Ratio3.4x

Price to Earnings Ratio vs Peers

How does HRL's PE Ratio compare to its peers?

HRL PE Ratio vs Peers
The above table shows the PE ratio for HRL vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average19.6x
MKC McCormick
34.7x7.8%US$23.7b
K Kellogg
17.2x3.4%US$25.5b
TSN Tyson Foods
7.8x-4.1%US$31.6b
CAG Conagra Brands
18.6x12.8%US$16.5b
HRL Hormel Foods
27.8x8.2%US$26.7b

Price-To-Earnings vs Peers: HRL is expensive based on its Price-To-Earnings Ratio (27.8x) compared to the peer average (19.6x).


Price to Earnings Ratio vs Industry

How does HRL's PE Ratio compare vs other companies in the US Food Industry?

Price-To-Earnings vs Industry: HRL is expensive based on its Price-To-Earnings Ratio (27.8x) compared to the US Food industry average (17.1x)


Price to Earnings Ratio vs Fair Ratio

What is HRL's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

HRL PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio27.8x
Fair PE Ratio24.9x

Price-To-Earnings vs Fair Ratio: HRL is expensive based on its Price-To-Earnings Ratio (27.8x) compared to the estimated Fair Price-To-Earnings Ratio (24.9x).


Share Price vs Fair Value

What is the Fair Price of HRL when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: HRL ($48.91) is trading below our estimate of fair value ($68.21)

Significantly Below Fair Value: HRL is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is lower than the current share price.


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Future Growth

How is Hormel Foods forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


8.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: HRL's forecast earnings growth (8.2% per year) is above the savings rate (1.9%).

Earnings vs Market: HRL's earnings (8.2% per year) are forecast to grow slower than the US market (12.8% per year).

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

Revenue vs Market: HRL's revenue (1.2% per year) is forecast to grow slower than the US market (7.9% per year).

High Growth Revenue: HRL's revenue (1.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if HRL's Return on Equity is forecast to be high in 3 years time


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Past Performance

How has Hormel Foods performed over the past 5 years?

Past Performance Score

3/6

Past Performance Score 3/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-0.002%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: HRL has high quality earnings.

Growing Profit Margin: HRL's current net profit margins (7.7%) are lower than last year (8.9%).


Past Earnings Growth Analysis

Earnings Trend: HRL's earnings have declined by 0% per year over the past 5 years.

Accelerating Growth: HRL's earnings growth over the past year (8.3%) exceeds its 5-year average (-0% per year).

Earnings vs Industry: HRL earnings growth over the past year (8.3%) exceeded the Food industry 5.4%.


Return on Equity

High ROE: HRL's Return on Equity (13.1%) is considered low.


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Financial Health

How is Hormel Foods's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: HRL's short term assets ($3.4B) exceed its short term liabilities ($1.5B).

Long Term Liabilities: HRL's short term assets ($3.4B) do not cover its long term liabilities ($4.3B).


Debt to Equity History and Analysis

Debt Level: HRL's net debt to equity ratio (32.5%) is considered satisfactory.

Reducing Debt: HRL's debt to equity ratio has increased from 5.3% to 44.6% over the past 5 years.

Debt Coverage: HRL's debt is well covered by operating cash flow (37.2%).

Interest Coverage: HRL's interest payments on its debt are well covered by EBIT (38.7x coverage).


Balance Sheet


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Dividend

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

Dividend Score

5/6

Dividend Score 5/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


2.13%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: HRL's dividend (2.13%) is higher than the bottom 25% of dividend payers in the US market (1.52%).

High Dividend: HRL's dividend (2.13%) is low compared to the top 25% of dividend payers in the US market (4.09%).


Stability and Growth of Payments

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

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


Earnings Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (57.1%), HRL's dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: With its reasonable cash payout ratio (60.2%), HRL's dividend payments are covered by cash flows.


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Management

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

7.4yrs

Average management tenure


CEO

Jim Snee (55 yo)

6.83yrs

Tenure

US$9,957,474

Compensation

Mr. James P. Snee, also known as Jim, has been the Chief Executive Officer of Hormel Foods Corporation since October 31, 2016 and its President from October 26, 2015. Mr. Snee served as the Chief Operating...


CEO Compensation Analysis

Compensation vs Market: Jim's total compensation ($USD9.96M) is about average for companies of similar size in the US market ($USD13.00M).

Compensation vs Earnings: Jim's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: HRL's management team is seasoned and experienced (7.4 years average tenure).


Board Members

Experienced Board: HRL's board of directors are considered experienced (8.1 years average tenure).


Ownership

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


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold 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 employee growth, exchange listings and data sources


Key Information

  • Name: Hormel Foods Corporation
  • Ticker: HRL
  • Exchange: NYSE
  • Founded: 1891
  • Industry: Packaged Foods and Meats
  • Sector: Food, Beverage & Tobacco
  • Implied Market Cap: US$26.708b
  • Shares outstanding: 546.06m
  • Website: https://www.hormelfoods.com

Number of Employees


Location

  • Hormel Foods Corporation
  • 1 Hormel Place
  • Austin
  • Minnesota
  • 55912-3680
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/06 00:00
End of Day Share Price2022/08/05 00:00
Earnings2022/05/01
Annual Earnings2021/10/31


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.