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 89 industry peers in the Food Products industry. Both the profitability and the financial health of HRL get a neutral evaluation. Nothing too spectacular is happening here. HRL is valued correctly, but it does not seem to be growing. HRL also has an excellent dividend rating. This makes HRL very considerable for dividend investing!
1. Profitability
1.1 Basic Checks
In the past year HRL was profitable.
HRL had a positive operating cash flow in the past year.
HRL had positive earnings in each of the past 5 years.
Each year in the past 5 years HRL had a positive operating cash flow.
1.2 Ratios
HRL has a better Return On Assets (5.65%) than 67.42% of its industry peers.
The Return On Equity of HRL (9.43%) is better than 60.67% of its industry peers.
HRL has a Return On Invested Capital of 6.37%. This is in the better half of the industry: HRL outperforms 64.04% of its industry peers.
The Average Return On Invested Capital over the past 3 years for HRL is in line with the industry average of 9.00%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.65% | ||
| ROE | 9.43% | ||
| ROIC | 6.37% |
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
HRL's Profit Margin of 6.35% is fine compared to the rest of the industry. HRL outperforms 77.53% of its industry peers.
In the last couple of years the Profit Margin of HRL has declined.
HRL has a Operating Margin of 8.28%. This is in the better half of the industry: HRL outperforms 71.91% of its industry peers.
HRL's Operating Margin has declined in the last couple of years.
HRL's Gross Margin of 16.70% is in line compared to the rest of the industry. HRL outperforms 43.82% of its industry peers.
HRL's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 8.28% | ||
| PM (TTM) | 6.35% | ||
| GM | 16.7% |
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
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 has been reduced compared to a year ago.
2.2 Solvency
HRL has an Altman-Z score of 3.91. This indicates that HRL is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of HRL (3.91) is better than 79.78% of its industry peers.
The Debt to FCF ratio of HRL is 3.21, which is a good value as it means it would take HRL, 3.21 years of fcf income to pay off all of its debts.
HRL's Debt to FCF ratio of 3.21 is fine compared to the rest of the industry. HRL outperforms 75.28% of its industry peers.
HRL has a Debt/Equity ratio of 0.36. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of HRL (0.36) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.36 | ||
| Debt/FCF | 3.21 | ||
| Altman-Z | 3.91 |
ROIC/WACC0.82
WACC7.81%
2.3 Liquidity
HRL has a Current Ratio of 2.45. This indicates that HRL is financially healthy and has no problem in meeting its short term obligations.
Looking at the Current ratio, with a value of 2.45, HRL is in the better half of the industry, outperforming 71.91% of the companies in the same industry.
HRL has a Quick Ratio of 1.31. This is a normal value and indicates that HRL is financially healthy and should not expect problems in meeting its short term obligations.
HRL has a better Quick ratio (1.31) than 74.16% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.45 | ||
| Quick Ratio | 1.31 |
3. Growth
3.1 Past
The earnings per share for HRL have decreased by -6.75% in the last year.
The Earnings Per Share has been decreasing by -1.91% on average over the past years.
HRL shows a decrease in Revenue. In the last year, the revenue decreased by -1.84%.
The Revenue has been growing slightly by 4.65% on average over the past years.
EPS 1Y (TTM)-6.75%
EPS 3Y-2.98%
EPS 5Y-1.91%
EPS Q2Q%-14.63%
Revenue 1Y (TTM)-1.84%
Revenue growth 3Y1.54%
Revenue growth 5Y4.65%
Sales Q2Q%-0.27%
3.2 Future
The Earnings Per Share is expected to grow by 5.66% on average over the next years.
HRL is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 2.13% yearly.
EPS Next Y3.12%
EPS Next 2Y6.76%
EPS Next 3Y6.87%
EPS Next 5Y5.66%
Revenue Next Year1.47%
Revenue Next 2Y1.86%
Revenue Next 3Y2.39%
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.
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
Based on the Price/Earnings ratio of 19.28, the valuation of HRL can be described as rather expensive.
The rest of the industry has a similar Price/Earnings ratio as HRL.
HRL's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.22.
A Price/Forward Earnings ratio of 16.28 indicates a correct valuation of HRL.
69.66% of the companies in the same industry are more expensive than HRL, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 20.86, HRL is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.28 | ||
| Fwd PE | 16.28 |
4.2 Price Multiples
HRL's Enterprise Value to EBITDA ratio is in line with the industry average.
HRL's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. HRL is cheaper than 64.04% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 18.1 | ||
| EV/EBITDA | 14.51 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates HRL does not grow enough to justify the current Price/Earnings ratio.
PEG (NY)6.17
PEG (5Y)N/A
EPS Next 2Y6.76%
EPS Next 3Y6.87%
5. Dividend
5.1 Amount
HRL has a Yearly Dividend Yield of 3.95%. Purely for dividend investing, there may be better candidates out there.
HRL's Dividend Yield is rather good when compared to the industry average which is at 4.44. HRL pays more dividend than 82.02% of the companies in the same industry.
HRL's Dividend Yield is rather good when compared to the S&P500 average which is at 2.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.95% |
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 their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)6.53%
Div Incr Years34
Div Non Decr Years34
5.3 Sustainability
HRL pays out 81.88% 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.
DP81.88%
EPS Next 2Y6.76%
EPS Next 3Y6.87%
29.31
-0.08 (-0.27%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryFood Products
Earnings (Last)
Earnings (Next)
Inst Owners89.5%
Inst Owner Change-1.52%
Ins Owners0.2%
Ins Owner Change0.08%
Market Cap16.12B
Analysts54.74
Price Target33.05 (12.76%)
Short Float %4.08%
Short Ratio3.67
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.95% |
Yearly Dividend1.12
Dividend Growth(5Y)6.53%
DP81.88%
Div Incr Years34
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-4.72%
Min EPS beat(2)-7.7%
Max EPS beat(2)-1.75%
EPS beat(4)2
Avg EPS beat(4)-0.67%
Min EPS beat(4)-7.7%
Max EPS beat(4)4.91%
EPS beat(8)4
Avg EPS beat(8)1.08%
EPS beat(12)6
Avg EPS beat(12)-0.36%
EPS beat(16)8
Avg EPS beat(16)-0.2%
Revenue beat(2)1
Avg Revenue beat(2)-0.18%
Min Revenue beat(2)-1.16%
Max Revenue beat(2)0.8%
Revenue beat(4)1
Avg Revenue beat(4)-1.7%
Min Revenue beat(4)-3.66%
Max Revenue beat(4)0.8%
Revenue beat(8)2
Avg Revenue beat(8)-1.86%
Revenue beat(12)3
Avg Revenue beat(12)-1.84%
Revenue beat(16)7
Avg Revenue beat(16)-0.13%
PT rev (1m)2.33%
PT rev (3m)0.45%
EPS NQ rev (1m)0.03%
EPS NQ rev (3m)-11.44%
EPS NY rev (1m)0.07%
EPS NY rev (3m)-2.6%
Revenue NQ rev (1m)0.03%
Revenue NQ rev (3m)0.07%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)0.36%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.28 | ||
| Fwd PE | 16.28 | ||
| P/S | 1.35 | ||
| P/FCF | 18.1 | ||
| P/OCF | 13.75 | ||
| P/B | 2.01 | ||
| P/tB | 11.65 | ||
| EV/EBITDA | 14.51 |
EPS(TTM)1.52
EY5.19%
EPS(NY)1.8
Fwd EY6.14%
FCF(TTM)1.62
FCFY5.53%
OCF(TTM)2.13
OCFY7.27%
SpS21.66
BVpS14.6
TBVpS2.52
PEG (NY)6.17
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.65% | ||
| ROE | 9.43% | ||
| ROCE | 8.17% | ||
| ROIC | 6.37% | ||
| ROICexc | 6.86% | ||
| ROICexgc | 16.86% | ||
| OM | 8.28% | ||
| PM (TTM) | 6.35% | ||
| GM | 16.7% | ||
| FCFM | 7.48% |
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-Score5
Asset Turnover0.89
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.36 | ||
| Debt/FCF | 3.21 | ||
| Debt/EBITDA | 2.29 | ||
| Cap/Depr | 108.41% | ||
| Cap/Sales | 2.36% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 94.06% | ||
| Profit Quality | 117.68% | ||
| Current Ratio | 2.45 | ||
| Quick Ratio | 1.31 | ||
| Altman-Z | 3.91 |
F-Score5
WACC7.81%
ROIC/WACC0.82
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)-6.75%
EPS 3Y-2.98%
EPS 5Y-1.91%
EPS Q2Q%-14.63%
EPS Next Y3.12%
EPS Next 2Y6.76%
EPS Next 3Y6.87%
EPS Next 5Y5.66%
Revenue 1Y (TTM)-1.84%
Revenue growth 3Y1.54%
Revenue growth 5Y4.65%
Sales Q2Q%-0.27%
Revenue Next Year1.47%
Revenue Next 2Y1.86%
Revenue Next 3Y2.39%
Revenue Next 5Y2.13%
EBIT growth 1Y-6.24%
EBIT growth 3Y-1.84%
EBIT growth 5Y-2.55%
EBIT Next Year27.33%
EBIT Next 3Y13.09%
EBIT Next 5Y8.93%
FCF growth 1Y29.35%
FCF growth 3Y9.5%
FCF growth 5Y9.93%
OCF growth 1Y22.74%
OCF growth 3Y8.13%
OCF growth 5Y6.54%