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. 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 on the other hand it scores bad on growth. 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
In the past year HRL was profitable.
HRL had a positive operating cash flow in the past year.
Each year in the past 5 years HRL has been profitable.
HRL had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With a decent Return On Assets value of 5.57%, HRL is doing good in the industry, outperforming 72.53% of the companies in the same industry.
HRL's Return On Equity of 9.31% is fine compared to the rest of the industry. HRL outperforms 64.84% of its industry peers.
With a decent Return On Invested Capital value of 6.44%, HRL is doing good in the industry, outperforming 67.03% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for HRL is significantly below the industry average of 28.19%.
| 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.
With a decent Operating Margin value of 8.38%, HRL is doing good in the industry, outperforming 71.43% of the companies in the same industry.
In the last couple of years the Operating Margin of HRL has declined.
Looking at the Gross Margin, with a value of 16.54%, HRL is in line with its industry, outperforming 43.96% of the companies in the same industry.
HRL's Gross Margin has declined in the last couple of years.
| 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
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.
The number of shares outstanding for HRL has been increased compared to 5 years ago.
Compared to 1 year ago, HRL has an improved debt to assets ratio.
2.2 Solvency
HRL has an Altman-Z score of 3.90. This indicates that HRL is financially healthy and has little risk of bankruptcy at the moment.
HRL has a Altman-Z score of 3.90. This is amongst the best in the industry. HRL outperforms 80.22% 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.
With an excellent Debt to FCF ratio value of 4.11, HRL belongs to the best of the industry, outperforming 80.22% of the companies in the same industry.
HRL has a Debt/Equity ratio of 0.35. This is a healthy value indicating a solid balance between debt and equity.
HRL's Debt to Equity ratio of 0.35 is in line compared to the rest of the industry. HRL outperforms 56.04% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | 4.11 | ||
| Altman-Z | 3.9 |
ROIC/WACC0.82
WACC7.85%
2.3 Liquidity
A Current Ratio of 2.47 indicates that HRL has no problem at all paying its short term obligations.
With a decent Current ratio value of 2.47, HRL is doing good in the industry, outperforming 74.73% of the companies in the same industry.
A Quick Ratio of 1.17 indicates that HRL should not have too much problems paying its short term obligations.
HRL has a better Quick ratio (1.17) than 69.23% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.47 | ||
| Quick Ratio | 1.17 |
3. Growth
3.1 Past
HRL shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -7.45%.
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.
The Revenue has decreased by -1.01% in the past year.
HRL shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 4.65% yearly.
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
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.
Based on estimates for the next years, HRL will show a small growth in Revenue. The Revenue will grow by 2.13% on average per year.
EPS Next Y3.1%
EPS Next 2Y7.52%
EPS Next 3Y9.03%
EPS Next 5Y5.66%
Revenue Next Year1.46%
Revenue Next 2Y2.01%
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.
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
HRL is valuated rather expensively with a Price/Earnings ratio of 19.16.
61.54% of the companies in the same industry are more expensive than HRL, based on the Price/Earnings ratio.
HRL's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.93.
The Price/Forward Earnings ratio is 15.63, which indicates a correct valuation of HRL.
Compared to the rest of the industry, the Price/Forward Earnings ratio of HRL indicates a somewhat cheap valuation: HRL is cheaper than 68.13% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of HRL to the average of the S&P500 Index (37.78), we can say HRL is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.16 | ||
| Fwd PE | 15.63 |
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 68.13% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.56 | ||
| EV/EBITDA | 14.47 |
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)6.18
PEG (5Y)N/A
EPS Next 2Y7.52%
EPS Next 3Y9.03%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.96%, HRL has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 4.67, HRL pays a better dividend. On top of this HRL pays more dividend than 81.32% 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 2.32.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.96% |
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
83.50% of the earnings are spent on dividend by HRL. This is not a sustainable payout ratio.
HRL's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP83.5%
EPS Next 2Y7.52%
EPS Next 3Y9.03%
28.55
-0.69 (-2.36%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryFood Products
Earnings (Last)
Earnings (Next)
Inst Owners89.88%
Inst Owner Change-0.21%
Ins Owners0.21%
Ins Owner Change0.04%
Market Cap15.70B
Analysts66.25
Price Target33.56 (17.55%)
Short Float %3.96%
Short Ratio3.52
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.96% |
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)0.38%
PT rev (3m)1.53%
EPS NQ rev (1m)-0.08%
EPS NQ rev (3m)-2.77%
EPS NY rev (1m)0.05%
EPS NY rev (3m)-0.02%
Revenue NQ rev (1m)0.37%
Revenue NQ rev (3m)0.07%
Revenue NY rev (1m)0.1%
Revenue NY rev (3m)-0.01%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.16 | ||
| Fwd PE | 15.63 | ||
| P/S | 1.32 | ||
| P/FCF | 22.56 | ||
| P/OCF | 15.82 | ||
| P/B | 1.95 | ||
| P/tB | 11.32 | ||
| EV/EBITDA | 14.47 |
EPS(TTM)1.49
EY5.22%
EPS(NY)1.83
Fwd EY6.4%
FCF(TTM)1.27
FCFY4.43%
OCF(TTM)1.8
OCFY6.32%
SpS21.68
BVpS14.61
TBVpS2.52
PEG (NY)6.18
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 | 3.9 |
F-Score6
WACC7.85%
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)-7.45%
EPS 3Y-2.98%
EPS 5Y-1.91%
EPS Q2Q%-7.89%
EPS Next Y3.1%
EPS Next 2Y7.52%
EPS Next 3Y9.03%
EPS Next 5Y5.66%
Revenue 1Y (TTM)-1.01%
Revenue growth 3Y1.54%
Revenue growth 5Y4.65%
Sales Q2Q%0.4%
Revenue Next Year1.46%
Revenue Next 2Y2.01%
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%