HORMEL FOODS CORP (HRL) Stock Fundamental Analysis
NYSE:HRL - New York Stock Exchange, Inc. - US4404521001 - Common Stock - Currency: USD
HRL gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 91 industry peers in the Food Products industry. HRL has an average financial health and profitability rating. HRL has a valuation in line with the averages, but on the other hand it scores bad on growth.
1. Profitability
1.1 Basic Checks
HRL had positive earnings in the past year.
In the past year HRL had a positive cash flow from operations.
In the past 5 years HRL has always been profitable.
HRL had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 5.57%, HRL is in the better half of the industry, outperforming 71.43% of the companies in the same industry.
With a decent Return On Equity value of 9.31%, HRL is doing good in the industry, outperforming 67.03% of the companies in the same industry.
HRL's Return On Invested Capital of 6.44% is fine compared to the rest of the industry. HRL outperforms 68.13% of its industry peers.
The Average Return On Invested Capital over the past 3 years for HRL is significantly below the industry average of 28.39%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.57% | ||
| ROE | 9.31% | ||
| ROIC | 6.44% |
ROA(3y)6.47%
ROA(5y)7.15%
ROE(3y)11.2%
ROE(5y)12.15%
ROIC(3y)7.49%
ROIC(5y)7.95%
1.3 Margins
With a decent Profit Margin value of 6.27%, HRL is doing good in the industry, outperforming 75.82% of the companies in the same industry.
HRL's Profit Margin has declined in the last couple of years.
The Operating Margin of HRL (8.38%) is better than 71.43% of its industry peers.
HRL's Operating Margin has declined in the last couple of years.
HRL has a Gross Margin (16.54%) which is comparable to the rest of the industry.
In the last couple of years the Gross Margin of HRL has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 8.38% | ||
| PM (TTM) | 6.27% | ||
| GM | 16.54% |
OM growth 3Y-3.33%
OM growth 5Y-6.88%
PM growth 3Y-5.43%
PM growth 5Y-8.11%
GM growth 3Y0.06%
GM growth 5Y-3.09%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so HRL is destroying value.
HRL has more shares outstanding than it did 1 year ago.
The number of shares outstanding for HRL has been increased compared to 5 years ago.
HRL has a better debt/assets ratio than last year.
2.2 Solvency
HRL has an Altman-Z score of 3.98. This indicates that HRL is financially healthy and has little risk of bankruptcy at the moment.
HRL has a better Altman-Z score (3.98) than 79.12% of its industry peers.
HRL has a debt to FCF ratio of 4.11. This is a neutral value as HRL would need 4.11 years to pay back of all of its debts.
HRL has a better Debt to FCF ratio (4.11) than 80.22% of its industry peers.
HRL has a Debt/Equity ratio of 0.35. This is a healthy value indicating a solid balance between debt and equity.
HRL has a Debt to Equity ratio (0.35) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | 4.11 | ||
| Altman-Z | 3.98 |
ROIC/WACC0.68
WACC9.52%
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 better Current ratio (2.47) than 73.63% of its industry peers.
HRL has a Quick Ratio of 1.17. This is a normal value and indicates that HRL is financially healthy and should not expect problems in meeting its short term obligations.
With a decent Quick ratio value of 1.17, HRL is doing good in the industry, outperforming 68.13% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.47 | ||
| Quick Ratio | 1.17 |
3. Growth
3.1 Past
The earnings per share for HRL have decreased by -7.45% in the last year.
Measured over the past years, HRL shows a decrease in Earnings Per Share. The EPS has been decreasing by -1.91% on average per year.
Looking at the last year, HRL shows a decrease in Revenue. The Revenue has decreased by -1.01% in the last year.
Measured over the past years, HRL shows a small growth in Revenue. The Revenue has been growing by 4.65% on average per year.
EPS 1Y (TTM)-7.45%
EPS 3Y-2.98%
EPS 5Y-1.91%
EPS Q2Q%-7.89%
Revenue 1Y (TTM)-1.01%
Revenue growth 3Y1.54%
Revenue growth 5Y4.65%
Sales Q2Q%0.4%
3.2 Future
HRL is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 5.66% yearly.
The Revenue is expected to grow by 2.13% on average over the next years.
EPS Next Y3.05%
EPS Next 2Y7.28%
EPS Next 3Y8.29%
EPS Next 5Y5.66%
Revenue Next Year1.36%
Revenue Next 2Y1.99%
Revenue Next 3Y2.28%
Revenue Next 5Y2.13%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 20.30, HRL is valued on the expensive side.
HRL's Price/Earnings ratio is in line with the industry average.
When comparing the Price/Earnings ratio of HRL to the average of the S&P500 Index (27.15), we can say HRL is valued slightly cheaper.
With a Price/Forward Earnings ratio of 16.63, HRL is valued correctly.
Compared to the rest of the industry, the Price/Forward Earnings ratio of HRL indicates a somewhat cheap valuation: HRL is cheaper than 67.03% of the companies listed in the same industry.
HRL is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.60, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.3 | ||
| Fwd PE | 16.63 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as HRL.
HRL's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. HRL is cheaper than 65.93% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.91 | ||
| EV/EBITDA | 15 |
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)6.67
PEG (5Y)N/A
EPS Next 2Y7.28%
EPS Next 3Y8.29%
5. Dividend
5.1 Amount
HRL has a Yearly Dividend Yield of 3.83%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 4.75, HRL pays a bit more dividend than its industry peers.
HRL's Dividend Yield is rather good when compared to the S&P500 average which is at 2.42.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.83% |
5.2 History
The dividend of HRL is nicely growing with an annual growth rate of 6.53%!
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)6.53%
Div Incr Years34
Div Non Decr Years34
5.3 Sustainability
HRL pays out 83.50% of its income as dividend. This is not a sustainable payout ratio.
The dividend of HRL is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP83.5%
EPS Next 2Y7.28%
EPS Next 3Y8.29%
30.25
-0.22 (-0.72%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryFood Products
Earnings (Last)
Earnings (Next)
Inst Owners89.88%
Inst Owner Change0.6%
Ins Owners0.21%
Ins Owner Change0.04%
Market Cap16.63B
Analysts67.5
Price Target33.43 (10.51%)
Short Float %3.78%
Short Ratio3.65
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.83% |
Yearly Dividend1.12
Dividend Growth(5Y)6.53%
DP83.5%
Div Incr Years34
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-3.33%
Min EPS beat(2)-7.7%
Max EPS beat(2)1.03%
EPS beat(4)2
Avg EPS beat(4)-1.64%
Min EPS beat(4)-7.7%
Max EPS beat(4)1.84%
EPS beat(8)4
Avg EPS beat(8)1.19%
EPS beat(12)6
Avg EPS beat(12)-0.38%
EPS beat(16)8
Avg EPS beat(16)-0.22%
Revenue beat(2)1
Avg Revenue beat(2)-0.23%
Min Revenue beat(2)-1.27%
Max Revenue beat(2)0.8%
Revenue beat(4)1
Avg Revenue beat(4)-1.1%
Min Revenue beat(4)-2.77%
Max Revenue beat(4)0.8%
Revenue beat(8)2
Avg Revenue beat(8)-1.59%
Revenue beat(12)3
Avg Revenue beat(12)-1.94%
Revenue beat(16)6
Avg Revenue beat(16)-0.64%
PT rev (1m)1.15%
PT rev (3m)3.51%
EPS NQ rev (1m)-2.69%
EPS NQ rev (3m)-2.69%
EPS NY rev (1m)-0.08%
EPS NY rev (3m)-0.01%
Revenue NQ rev (1m)-0.3%
Revenue NQ rev (3m)-0.3%
Revenue NY rev (1m)-0.12%
Revenue NY rev (3m)-0.07%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.3 | ||
| Fwd PE | 16.63 | ||
| P/S | 1.4 | ||
| P/FCF | 23.91 | ||
| P/OCF | 16.76 | ||
| P/B | 2.07 | ||
| P/tB | 11.99 | ||
| EV/EBITDA | 15 |
EPS(TTM)1.49
EY4.93%
EPS(NY)1.82
Fwd EY6.01%
FCF(TTM)1.27
FCFY4.18%
OCF(TTM)1.8
OCFY5.96%
SpS21.68
BVpS14.61
TBVpS2.52
PEG (NY)6.67
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.57% | ||
| ROE | 9.31% | ||
| ROCE | 8.26% | ||
| ROIC | 6.44% | ||
| ROICexc | 6.83% | ||
| ROICexgc | 16.4% | ||
| OM | 8.38% | ||
| PM (TTM) | 6.27% | ||
| GM | 16.54% | ||
| FCFM | 5.83% |
ROA(3y)6.47%
ROA(5y)7.15%
ROE(3y)11.2%
ROE(5y)12.15%
ROIC(3y)7.49%
ROIC(5y)7.95%
ROICexc(3y)8.08%
ROICexc(5y)8.91%
ROICexgc(3y)21.3%
ROICexgc(5y)22.65%
ROCE(3y)9.6%
ROCE(5y)10.2%
ROICexcg growth 3Y-7.22%
ROICexcg growth 5Y-11.81%
ROICexc growth 3Y-3.68%
ROICexc growth 5Y-13.2%
OM growth 3Y-3.33%
OM growth 5Y-6.88%
PM growth 3Y-5.43%
PM growth 5Y-8.11%
GM growth 3Y0.06%
GM growth 5Y-3.09%
F-Score6
Asset Turnover0.89
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | 4.11 | ||
| Debt/EBITDA | 2.26 | ||
| Cap/Depr | 114.09% | ||
| Cap/Sales | 2.49% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 78.83% | ||
| Profit Quality | 93.08% | ||
| Current Ratio | 2.47 | ||
| Quick Ratio | 1.17 | ||
| Altman-Z | 3.98 |
F-Score6
WACC9.52%
ROIC/WACC0.68
Cap/Depr(3y)104.11%
Cap/Depr(5y)118.53%
Cap/Sales(3y)2.21%
Cap/Sales(5y)2.5%
Profit Quality(3y)103.03%
Profit Quality(5y)95.5%
High Growth Momentum
Growth
EPS 1Y (TTM)-7.45%
EPS 3Y-2.98%
EPS 5Y-1.91%
EPS Q2Q%-7.89%
EPS Next Y3.05%
EPS Next 2Y7.28%
EPS Next 3Y8.29%
EPS Next 5Y5.66%
Revenue 1Y (TTM)-1.01%
Revenue growth 3Y1.54%
Revenue growth 5Y4.65%
Sales Q2Q%0.4%
Revenue Next Year1.36%
Revenue Next 2Y1.99%
Revenue Next 3Y2.28%
Revenue Next 5Y2.13%
EBIT growth 1Y-1.14%
EBIT growth 3Y-1.84%
EBIT growth 5Y-2.55%
EBIT Next Year27.07%
EBIT Next 3Y12.96%
EBIT Next 5Y8.92%
FCF growth 1Y-4.48%
FCF growth 3Y9.5%
FCF growth 5Y9.93%
OCF growth 1Y2.33%
OCF growth 3Y8.13%
OCF growth 5Y6.54%