HORMEL FOODS CORP (HRL) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:HRL - US4404521001 - Common Stock
25.2 USD
+0.35 (+1.41%)
25.18 USD
-0.02 (-0.08%)
Taking everything into account, HRL scores 4 out of 10 in our fundamental rating. HRL was compared to 87 industry peers in the Food Products industry. HRL has an average financial health and profitability rating. HRL does not seem to be growing, but still is valued expensively. Finally HRL also has an excellent dividend rating. With these ratings, HRL could be worth investigating further for dividend investing!.
1. Profitability
1.1 Basic Checks
- HRL had positive earnings in the past year.
- HRL had a positive operating cash flow in the past year.
- HRL had positive earnings in each of the past 5 years.
- HRL had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- HRL has a Return On Assets of 3.57%. This is in the better half 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.
- Measured over the past 3 years, the Average Return On Invested Capital for HRL 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
- HRL's Profit Margin of 3.95% is fine compared to the rest of the industry. HRL outperforms 66.67% of its industry peers.
- HRL's Profit Margin has declined in the last couple of years.
- With a decent Operating Margin value of 7.94%, HRL is doing good in the industry, outperforming 71.26% of the companies in the same industry.
- In the last couple of years the Operating Margin of HRL has declined.
- HRL's Gross Margin of 15.70% is in line compared to the rest of the industry. HRL outperforms 43.68% of its industry peers.
- In the last couple of years the Gross Margin of HRL has declined.
| 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%
2. Health
2.1 Basic Checks
- HRL has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
- The number of shares outstanding for HRL has been increased compared to 1 year ago.
- Compared to 5 years ago, HRL has more shares outstanding
- The debt/assets ratio for HRL is higher compared to a year ago.
2.2 Solvency
- An Altman-Z score of 3.60 indicates that HRL is not in any danger for bankruptcy at the moment.
- HRL's Altman-Z score of 3.60 is fine compared to the rest of the industry. HRL outperforms 74.71% of its industry peers.
- The Debt to FCF ratio of HRL is 5.35, which is a neutral value as it means it would take HRL, 5.35 years of fcf income to pay off 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.
- HRL has a Debt to Equity ratio of 0.36. This is comparable to the rest of the industry: HRL outperforms 57.47% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.36 | ||
| Debt/FCF | 5.35 | ||
| Altman-Z | 3.6 |
ROIC/WACC0.78
WACC7.68%
2.3 Liquidity
- A Current Ratio of 2.47 indicates that HRL has no problem at all paying its short term obligations.
- HRL has a Current ratio of 2.47. This is in the better half of the industry: HRL outperforms 71.26% of its industry peers.
- HRL has a Quick Ratio of 1.20. This is a normal value and indicates that HRL is financially healthy and should not expect problems in meeting its short term obligations.
- The Quick ratio of HRL (1.20) is better than 68.97% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.47 | ||
| Quick Ratio | 1.2 |
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%.
- Measured over the past years, HRL shows a decrease in Earnings Per Share. The EPS has been decreasing by -3.88% on average per year.
- Looking at the last year, HRL shows a small growth in Revenue. The Revenue has grown by 1.55% in the last year.
- The Revenue has been growing slightly by 4.73% on average over the past years.
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
- HRL is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 5.70% yearly.
- 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
- The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- The Price/Earnings ratio is 18.39, which indicates a rather expensive current valuation of HRL.
- HRL's Price/Earnings is on the same level as the industry average.
- Compared to an average S&P500 Price/Earnings ratio of 28.87, HRL is valued a bit cheaper.
- The Price/Forward Earnings ratio is 17.03, which indicates a rather expensive current valuation of HRL.
- Based on the Price/Forward Earnings ratio, HRL is valued a bit cheaper than the industry average as 67.82% of the companies are valued more expensively.
- The average S&P500 Price/Forward Earnings ratio is at 25.96. HRL is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.39 | ||
| Fwd PE | 17.03 |
4.2 Price Multiples
- HRL's Enterprise Value to EBITDA is on the same level as the industry average.
- The rest of the industry has a similar Price/Free Cash Flow ratio as HRL.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.94 | ||
| EV/EBITDA | 12.89 |
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)2.3
PEG (5Y)N/A
EPS Next 2Y7.69%
EPS Next 3Y7.32%
5. Dividend
5.1 Amount
- HRL has a Yearly Dividend Yield of 4.80%, which is a nice return.
- Compared to an average industry Dividend Yield of 2.29, 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 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.8% |
5.2 History
- The dividend of HRL has a limited annual growth rate of 4.90%.
- HRL has been paying a dividend for at least 10 years, so it has 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%
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%.