We assign a fundamental rating of 4 out of 10 to HRL. HRL was compared to 87 industry peers in the Food Products industry. HRL has only an average score on both its financial health and profitability. HRL has a expensive valuation and it also scores bad on growth. HRL also has an excellent dividend rating. With these ratings, HRL could be worth investigating further for dividend investing!.

Quickly go to:

1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year HRL was profitable.
In the past year HRL had a positive cash flow from operations.
In the past 5 years HRL has always been profitable.
Each year in the past 5 years HRL had a positive operating cash flow.

1.2 Ratios

HRL's Return On Assets of 3.57% is fine compared to the rest of the industry. HRL outperforms 63.22% of its industry peers.
HRL's Return On Equity of 6.05% is in line compared to the rest of the industry. HRL outperforms 59.77% of its industry peers.
HRL has a better Return On Invested Capital (5.99%) than 65.52% of its industry peers.
HRL had an Average Return On Invested Capital over the past 3 years of 6.47%. This is significantly below the industry average of 27.79%.

		Industry Rank	Sector Rank
ROA	3.57%
ROE	6.05%
ROIC	5.99%

ROA(3y)5.15%

ROA(5y)6.03%

ROE(3y)8.79%

ROE(5y)10.54%

ROIC(3y)6.47%

ROIC(5y)6.94%

1.3 Margins

With a decent Profit Margin value of 3.95%, HRL is doing good in the industry, outperforming 66.67% of the companies in the same industry.
HRL's Profit Margin has declined in the last couple of years.
The Operating Margin of HRL (7.94%) is better than 71.26% of its industry peers.
HRL's Operating Margin has declined in the last couple of years.
HRL has a Gross Margin (15.70%) which is in line with its industry peers.
HRL's Gross Margin has declined in the last couple of years.

		Industry Rank	Sector Rank
OM	7.94%
PM (TTM)	3.95%
GM	15.7%

OM growth 3Y-8.39%

OM growth 5Y-6.45%

PM growth 3Y-21.05%

PM growth 5Y-16.01%

GM growth 3Y-3.32%

GM growth 5Y-3.74%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so HRL is destroying value.
The number of shares outstanding for HRL has been increased compared to 1 year ago.
The number of shares outstanding for HRL has been increased compared to 5 years ago.
HRL has a worse debt/assets ratio than last year.

2.2 Solvency

HRL has an Altman-Z score of 3.59. This indicates that HRL is financially healthy and has little risk of bankruptcy at the moment.
HRL has a better Altman-Z score (3.59) than 75.86% of its industry peers.
HRL has a debt to FCF ratio of 5.35. This is a neutral value as HRL would need 5.35 years to pay back of all of its debts.
HRL has a Debt to FCF ratio of 5.35. This is in the better half of the industry: HRL outperforms 77.01% of its industry peers.
A Debt/Equity ratio of 0.36 indicates that HRL is not too dependend on debt financing.
With a Debt to Equity ratio value of 0.36, HRL perfoms like the industry average, outperforming 57.47% of the companies in the same industry.

		Industry Rank	Sector Rank
Debt/Equity	0.36
Debt/FCF	5.35
Altman-Z	3.59

ROIC/WACC0.78

WACC7.69%

2.3 Liquidity

HRL has a Current Ratio of 2.47. This indicates that HRL is financially healthy and has no problem in meeting its short term obligations.
The Current ratio of HRL (2.47) is better than 71.26% of its industry peers.
A Quick Ratio of 1.20 indicates that HRL should not have too much problems paying its short term obligations.
With a decent Quick ratio value of 1.20, HRL is doing good in the industry, outperforming 68.97% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	2.47
Quick Ratio	1.2

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

HRL shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -13.29%.
HRL shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -3.88% yearly.
HRL shows a small growth in Revenue. In the last year, the Revenue has grown by 1.55%.
HRL shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 4.73% yearly.

EPS 1Y (TTM)-13.29%

EPS 3Y-9.2%

EPS 5Y-3.88%

EPS Q2Q%-23.81%

Revenue 1Y (TTM)1.55%

Revenue growth 3Y-0.95%

Revenue growth 5Y4.73%

Sales Q2Q%1.52%

3.2 Future

Based on estimates for the next years, HRL will show a small growth in Earnings Per Share. The EPS will grow by 5.70% on average per year.
The Revenue is expected to grow by 1.92% on average over the next years.

EPS Next Y8%

EPS Next 2Y7.69%

EPS Next 3Y7.32%

EPS Next 5Y5.7%

Revenue Next Year2.06%

Revenue Next 2Y2.15%

Revenue Next 3Y2.08%

Revenue Next 5Y1.92%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 17.96, the valuation of HRL can be described as rather expensive.
The rest of the industry has a similar Price/Earnings ratio as HRL.
When comparing the Price/Earnings ratio of HRL to the average of the S&P500 Index (28.32), we can say HRL is valued slightly cheaper.
A Price/Forward Earnings ratio of 16.63 indicates a correct valuation of HRL.
Based on the Price/Forward Earnings ratio, HRL is valued a bit cheaper than the industry average as 68.97% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 25.57. HRL is valued slightly cheaper when compared to this.

		Industry Rank	Sector Rank
PE	17.96
Fwd PE	16.63

4.2 Price Multiples

HRL's Enterprise Value to EBITDA is on the same level as the industry average.
HRL's Price/Free Cash Flow ratio is in line with the industry average.

		Industry Rank	Sector Rank
P/FCF	25.33
EV/EBITDA	12.79

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.

PEG (NY)2.25

PEG (5Y)N/A

EPS Next 2Y7.69%

EPS Next 3Y7.32%

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5. Dividend

5.1 Amount

HRL has a Yearly Dividend Yield of 4.79%, which is a nice return.
Compared to an average industry Dividend Yield of 2.30, HRL pays a better dividend. On top of this HRL pays more dividend than 83.91% of the companies listed in the same industry.
HRL's Dividend Yield is rather good when compared to the S&P500 average which is at 1.83.

		Industry Rank	Sector Rank
Dividend Yield	4.79%

5.2 History

The dividend of HRL has a limited annual growth rate of 4.90%.
HRL has paid a dividend for at least 10 years, which is a reliable track record.
HRL has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.

Dividend Growth(5Y)4.9%

Div Incr Years34

Div Non Decr Years34

5.3 Sustainability

132.41% of the earnings are spent on dividend by HRL. This is not a sustainable payout ratio.
HRL's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.

DP132.41%

EPS Next 2Y7.69%

EPS Next 3Y7.32%

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HORMEL FOODS CORP / HRL FAQ

What is the fundamental rating for HRL stock?

ChartMill assigns a fundamental rating of 4 / 10 to HRL.

What is the valuation status for HRL stock?

ChartMill assigns a valuation rating of 3 / 10 to HORMEL FOODS CORP (HRL). This can be considered as Overvalued.

What is the profitability of HRL stock?

HORMEL FOODS CORP (HRL) has a profitability rating of 5 / 10.

What is the earnings growth outlook for HORMEL FOODS CORP?

The Earnings per Share (EPS) of HORMEL FOODS CORP (HRL) is expected to grow by 8% in the next year.

Can you provide the dividend sustainability for HRL stock?

The dividend rating of HORMEL FOODS CORP (HRL) is 7 / 10 and the dividend payout ratio is 132.41%.