HORMEL FOODS CORP (HRL) Stock Fundamental Analysis
NYSE:HRL - New York Stock Exchange, Inc. - US4404521001 - Common Stock - Currency: USD
Taking everything into account, HRL scores 5 out of 10 in our fundamental rating. HRL was compared to 90 industry peers in the Food Products industry. While HRL has a great health rating, its profitability is only average at the moment. HRL has a valuation in line with the averages, but it does not seem to be growing. Finally HRL also has an excellent dividend rating. These ratings could make HRL a good candidate for dividend investing.
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.
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
The Return On Assets of HRL (5.65%) is better than 75.56% of its industry peers.
The Return On Equity of HRL (9.43%) is better than 70.00% of its industry peers.
HRL has a better Return On Invested Capital (6.37%) than 66.67% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for HRL is in line with the industry average of 8.63%.
| 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
The Profit Margin of HRL (6.35%) is better than 77.78% of its industry peers.
HRL's Profit Margin has declined in the last couple of years.
The Operating Margin of HRL (8.28%) is better than 72.22% of its industry peers.
In the last couple of years the Operating Margin of HRL has declined.
HRL has a Gross Margin of 16.70%. This is comparable to the rest of the industry: HRL outperforms 43.33% of its industry peers.
In the last couple of years the Gross Margin of HRL has declined.
| 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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), HRL is destroying value.
HRL has more shares outstanding than it did 1 year ago.
HRL has more shares outstanding than it did 5 years ago.
The debt/assets ratio for HRL has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 3.92 indicates that HRL is not in any danger for bankruptcy at the moment.
HRL has a better Altman-Z score (3.92) than 78.89% of its industry peers.
HRL has a debt to FCF ratio of 3.21. This is a good value and a sign of high solvency as HRL would need 3.21 years to pay back of all of its debts.
HRL's Debt to FCF ratio of 3.21 is amongst the best of the industry. HRL outperforms 83.33% 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.
Looking at the Debt to Equity ratio, with a value of 0.36, HRL is in line with its industry, outperforming 56.67% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.36 | ||
| Debt/FCF | 3.21 | ||
| Altman-Z | 3.92 |
ROIC/WACC0.8
WACC7.97%
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.
HRL's Current ratio of 2.45 is fine compared to the rest of the industry. HRL outperforms 73.33% of its industry peers.
A Quick Ratio of 1.31 indicates that HRL should not have too much problems paying its short term obligations.
HRL has a better Quick ratio (1.31) than 70.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.45 | ||
| Quick Ratio | 1.31 |
3. Growth
3.1 Past
HRL shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -6.75%.
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
Based on estimates for the next years, HRL will show a small growth in Earnings Per Share. The EPS will grow by 5.66% on average per year.
The Revenue is expected to grow by 2.13% on average over the next years.
EPS Next Y3.12%
EPS Next 2Y6.76%
EPS Next 3Y6.87%
EPS Next 5Y5.66%
Revenue Next Year1.48%
Revenue Next 2Y1.87%
Revenue Next 3Y2.4%
Revenue Next 5Y2.13%
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.
4. Valuation
4.1 Price/Earnings Ratio
HRL is valuated rather expensively with a Price/Earnings ratio of 19.37.
Compared to the rest of the industry, the Price/Earnings ratio of HRL is on the same level as its industry peers.
HRL is valuated rather cheaply when we compare the Price/Earnings ratio to 25.82, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 16.35, which indicates a correct valuation of HRL.
HRL's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. HRL is cheaper than 67.78% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.76, HRL is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.37 | ||
| Fwd PE | 16.35 |
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 a bit cheaper when compared to the industry. HRL is cheaper than 70.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 18.18 | ||
| EV/EBITDA | 14.57 |
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)6.2
PEG (5Y)N/A
EPS Next 2Y6.76%
EPS Next 3Y6.87%
5. Dividend
5.1 Amount
HRL has a Yearly Dividend Yield of 3.94%.
Compared to an average industry Dividend Yield of 4.65, HRL pays a better dividend. On top of this HRL pays more dividend than 82.22% 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 2.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.94% |
5.2 History
On average, the dividend of HRL grows each year by 6.53%, which is quite nice.
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)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%
29.44
-0.01 (-0.03%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryFood Products
Earnings (Last)
Earnings (Next)
Inst Owners89.5%
Inst Owner Change0.66%
Ins Owners0.2%
Ins Owner Change0.08%
Market Cap16.19B
Analysts54.74
Price Target33.05 (12.26%)
Short Float %3.93%
Short Ratio3.81
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.94% |
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)1.15%
EPS NQ rev (1m)-1.83%
EPS NQ rev (3m)-11.56%
EPS NY rev (1m)0%
EPS NY rev (3m)-1.91%
Revenue NQ rev (1m)-0.44%
Revenue NQ rev (3m)-0.37%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)0.46%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.37 | ||
| Fwd PE | 16.35 | ||
| P/S | 1.36 | ||
| P/FCF | 18.18 | ||
| P/OCF | 13.81 | ||
| P/B | 2.02 | ||
| P/tB | 11.7 | ||
| EV/EBITDA | 14.57 |
EPS(TTM)1.52
EY5.16%
EPS(NY)1.8
Fwd EY6.12%
FCF(TTM)1.62
FCFY5.5%
OCF(TTM)2.13
OCFY7.24%
SpS21.66
BVpS14.6
TBVpS2.52
PEG (NY)6.2
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 | 3.92 |
F-Score5
WACC7.97%
ROIC/WACC0.8
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 Year1.48%
Revenue Next 2Y1.87%
Revenue Next 3Y2.4%
Revenue Next 5Y2.13%
EBIT growth 1Y-6.24%
EBIT growth 3Y-1.84%
EBIT growth 5Y-2.55%
EBIT Next Year27.07%
EBIT Next 3Y12.96%
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%