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1. Company Snapshot

1.a. Company Description

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.


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.

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1.b. Last Insights on HRL

Hormel Foods Corporation faces challenges, including investigations by law firms Levi & Korsinsky and Rosen Law Firm regarding potential securities claims. The company cut its forecast due to price pressure and a weak consumer backdrop. Additionally, Hormel reported Q4 earnings exceeding $12 billion in net sales, representing 2% organic growth. However, operating income was $719 million, with adjusted operating income over $1 billion. The company also faces rising input costs and slow pricing recovery, threatening near-term margins. A Hold rating is warranted pending evidence of sustained profit and cash flow improvement.

1.c. Company Highlights

2. Hormel Foods' Q3 Earnings: Top-Line Growth Masks Margin Pressures

Hormel Foods Corporation reported a 6% increase in organic net sales for the third quarter, driven by a 4% volume growth. The retail segment led the way with a 5% increase in volume and net sales, supported by strong performance from turkey, pepperoni, and the SPAM brand. Despite the top-line success, adjusted EPS came in at $0.35, below estimates of $0.41, due to higher-than-expected input costs. Gross profit remained flat year-over-year, impacted by inflationary pressures, particularly in pork, beef, and nuts.

Publication Date: Sep -01

📋 Highlights
  • Top-Line Growth:: Organic net sales rose 6% (4% volume growth), driven by retail (5% volume) and food service (7% net sales, 2% volume) segments.
  • International Recovery:: China’s rebound fueled 8% volume and 6% net sales growth in international operations.
  • Gross Profit Pressure:: Flat gross profit year-over-year due to unanticipated 20%+ surge in pork, beef, and nut costs, offset partially by the T&M initiative.
  • Earnings Guidance:: Q4 adjusted EPS projected at $0.38–$0.40, with 2026 guidance delayed due to inflation and slower foodservice recovery.
  • Strategic Focus:: Pricing actions (e.g., 13% Jennie-O ground turkey growth) and SG&A cuts aim to improve margins, with full T&M benefits expected by 2026.

Segment Performance

The retail segment's strong performance was complemented by growth in the food service segment, with volume and net sales growing 2% and 7%, respectively. International sales also posted strong growth, with an 8% volume growth and 6% net sales growth, fueled by China's recovery. The company's Transform and Modernize (T&M) initiative helped mitigate some of the margin pressures, but did not fully offset the impact of higher input costs.

Margin Pressures and Pricing Actions

Hormel expects continued top-line growth in the fourth quarter, but profit recovery is anticipated to lag into 2026. The company is implementing targeted pricing actions to address commodity inflation, which are expected to benefit starting in Q4 and continuing into Q1. Adjusted SG&A increased 6% primarily due to employee-related expenses and higher advertising investments.

Valuation and Outlook

With a P/E Ratio of 18.55 and an EV/EBITDA of 12.07, the market appears to be pricing in a certain level of growth. The company's ROE (%) of 8.48 and ROIC (%) of 6.5 indicate a relatively stable profitability profile. Hormel's dividend yield of 4.53% and free cash flow yield of 4.49% are also attractive. Analysts estimate next year's revenue growth at 2.6%, which may be challenging given the current inflationary environment. The company's guidance for Q4 adjusted EPS is in the range of $0.38 to $0.40, reflecting ongoing industry dynamics.

Long-Term Prospects

Hormel is focusing on driving sustainable growth and profitability by leveraging its strengths, including innovation in bacon and pepperoni, leadership in healthy protein options, and strong global brands like SPAM and Skippy. The company's ground turkey business is performing well, driven by strong consumer demand for lean protein, resulting in market share gains. Long-term supply agreements provide Hormel with confidence in securing pork supplies, despite recent production challenges in the hog industry.

3. NewsRoom

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Hormel Foods Corp (HRL) Q4 2025 Earnings Call Highlights: Navigating Growth Amidst Commodity Challenges

Dec -04

Source: gurufocus.com

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Hormel Foods Corporation (HRL) Q4 2025 Earnings Call Transcript

Dec -04

Source: seekingalpha.com

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Dow Jones Today: Major Stock Indexes Little Changed; Weekly Jobless Claims Unexpectedly Fall; Inflation Data on Tap Tomorrow

Dec -04

Source: investopedia.com

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Hormel's Strong FY2026 EPS View: Is It Enough To Break The Downtrend?

Dec -04

Source: seekingalpha.com

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Hormel Foods Q4 Earnings Beat Estimates, Sales Increase Y/Y

Dec -04

Source: zacks.com

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Hormel (HRL) Q4 Earnings: How Key Metrics Compare to Wall Street Estimates

Dec -04

Source: zacks.com

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Live Nasdaq Composite: Markets Hunt Direction as Meta Captures Spotlight

Dec -04

Source: 247wallst.com

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The Highest-Yielding Dividend Aristocrats Deliver 5%-6% Yields and Safety

Dec -04

Source: 247wallst.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.27%)

6. Segments

Retail

Expected Growth: 2.5%

Hormel Foods Corporation's Retail segment growth of 2.5% is driven by increasing demand for convenient and protein-rich products, particularly in the deli and meat snacks categories. Strong brand recognition, innovative product launches, and strategic pricing also contribute to growth. Additionally, the company's focus on e-commerce and digital marketing helps to expand its customer base and increase sales.

Food Service

Expected Growth: 1.8%

Hormel Foods Corporation's Food Service segment growth of 1.8% is driven by increasing demand for convenient, portable, and protein-rich food products, particularly in the education and healthcare channels. Additionally, strategic acquisitions, product innovation, and expanded distribution networks have contributed to the segment's growth.

International

Expected Growth: 2.2%

Hormel Foods' international segment growth of 2.2% is driven by increasing demand for protein-rich products, particularly in Asia and Latin America. Strong sales of Spam and Skippy peanut butter in these regions, coupled with strategic acquisitions and partnerships, have contributed to the segment's growth. Additionally, the company's focus on e-commerce and digital marketing has helped expand its international presence.

7. Detailed Products

Refrigerated Foods

Hormel Foods' Refrigerated Foods segment offers a variety of products, including hams, bacon, sausages, and deli meats.

Jennie-O Turkey Store

Jennie-O Turkey Store offers a range of turkey-based products, including whole turkeys, turkey breasts, and turkey sausages.

Grocery Products

Hormel Foods' Grocery Products segment includes a variety of canned goods, such as SPAM, Dinty Moore stew, and Hormel chili.

International & Other

This segment includes Hormel Foods' international business, as well as other products and services, such as nutritional products and foodservice offerings.

Skippy Peanut Butter

Skippy peanut butter is a popular brand of creamy and crunchy peanut butter.

MegaMex Foods

MegaMex Foods offers a range of Mexican-inspired foods, including Wholly Guacamole and La Tortilla Factory.

8. Hormel Foods Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Hormel Foods Corporation faces moderate threat from substitutes due to the presence of alternative protein sources such as plant-based meat alternatives and other packaged meat products.

Bargaining Power Of Customers

Hormel Foods Corporation has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's strong brand portfolio and wide distribution network make it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

Hormel Foods Corporation relies on a network of suppliers for raw materials such as pork, beef, and poultry. While the company has some bargaining power due to its scale, suppliers may still exert some pressure on prices and quality.

Threat Of New Entrants

The threat of new entrants is low in the packaged meat industry due to high barriers to entry, including significant capital requirements, regulatory hurdles, and the need for established distribution networks.

Intensity Of Rivalry

The packaged meat industry is highly competitive, with several established players competing for market share. Hormel Foods Corporation faces intense rivalry from companies such as Tyson Foods, Cargill, and JBS USA.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 29.95%
Debt Cost 3.95%
Equity Weight 70.05%
Equity Cost 5.31%
WACC 4.90%
Leverage 42.76%

11. Quality Control: Hormel Foods Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Lancaster Colony

A-Score: 5.7/10

Value: 3.6

Growth: 5.9

Quality: 7.1

Yield: 4.0

Momentum: 4.0

Volatility: 9.3

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Hormel Foods

A-Score: 5.3/10

Value: 5.8

Growth: 4.0

Quality: 5.5

Yield: 7.0

Momentum: 1.0

Volatility: 8.3

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McCormick

A-Score: 5.0/10

Value: 3.3

Growth: 4.2

Quality: 6.1

Yield: 5.0

Momentum: 2.5

Volatility: 9.0

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Simply Good Foods

A-Score: 4.2/10

Value: 5.6

Growth: 5.4

Quality: 6.6

Yield: 0.0

Momentum: 1.0

Volatility: 6.7

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Freshpet

A-Score: 3.3/10

Value: 2.1

Growth: 9.1

Quality: 4.2

Yield: 0.0

Momentum: 0.5

Volatility: 4.0

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BellRing Brands

A-Score: 3.1/10

Value: 5.4

Growth: 2.7

Quality: 6.1

Yield: 0.0

Momentum: 0.5

Volatility: 3.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

24.34$

Current Price

24.34$

Potential

-0.00%

Expected Cash-Flows