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 91 industry peers in the Food Products industry. HRL has an average financial health and profitability rating. HRL is valued correctly, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
In the past year HRL was profitable.
In the past year HRL had a positive cash flow from operations.
In the past 5 years HRL has always been profitable.
In the past 5 years HRL always reported a positive cash flow from operatings.
1.2 Ratios
HRL has a Return On Assets of 5.57%. This is in the better half of the industry: HRL outperforms 71.43% of its industry peers.
The Return On Equity of HRL (9.31%) is better than 67.03% of its industry peers.
With a decent Return On Invested Capital value of 6.44%, HRL is doing good in the industry, outperforming 68.13% 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 28.40%.
| 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
HRL has a better Profit Margin (6.27%) than 75.82% of its industry peers.
In the last couple of years the Profit Margin of HRL has declined.
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.
HRL has a Gross Margin (16.54%) which is in line with its industry peers.
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
HRL has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, HRL has more shares outstanding
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 4.00 indicates that HRL is not in any danger for bankruptcy at the moment.
With a decent Altman-Z score value of 4.00, HRL is doing good in the industry, outperforming 79.12% of the companies in the same industry.
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.
Looking at the Debt to FCF ratio, with a value of 4.11, HRL belongs to the top of the industry, outperforming 80.22% of the companies in the same industry.
A Debt/Equity ratio of 0.35 indicates that HRL is not too dependend on debt financing.
HRL has a Debt to Equity ratio of 0.35. This is comparable 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 | 4 |
ROIC/WACC0.68
WACC9.52%
2.3 Liquidity
HRL has a Current Ratio of 2.47. This indicates that HRL is financially healthy and has no problem in meeting its short term obligations.
HRL has a Current ratio of 2.47. This is in the better half of the industry: HRL outperforms 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.
Looking at the Quick ratio, with a value of 1.17, HRL is in the better half of 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
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.
The Revenue has been growing slightly by 4.65% on average over the past years.
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.
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
With a Price/Earnings ratio of 20.45, HRL is valued on the expensive side.
60.44% of the companies in the same industry are more expensive than HRL, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 27.45. HRL is valued slightly cheaper when compared to this.
Based on the Price/Forward Earnings ratio of 16.76, the valuation of HRL can be described as correct.
Based on the Price/Forward Earnings ratio, HRL is valued a bit cheaper than the industry average as 67.03% of the companies are valued more expensively.
When comparing the Price/Forward Earnings ratio of HRL to the average of the S&P500 Index (21.90), we can say HRL is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.45 | ||
| Fwd PE | 16.76 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as HRL.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of HRL indicates a somewhat cheap valuation: HRL is cheaper than 67.03% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.08 | ||
| EV/EBITDA | 15.15 |
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)6.71
PEG (5Y)N/A
EPS Next 2Y7.28%
EPS Next 3Y8.29%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.83%, HRL has a reasonable but not impressive dividend return.
HRL's Dividend Yield is a higher than the industry average which is at 4.75.
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
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 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 2Y7.28%
EPS Next 3Y8.29%
30.47
-0.34 (-1.1%)
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 Cap16.76B
Analysts67.5
Price Target33.43 (9.71%)
Short Float %4.43%
Short Ratio4.3
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 | 20.45 | ||
| Fwd PE | 16.76 | ||
| P/S | 1.41 | ||
| P/FCF | 24.08 | ||
| P/OCF | 16.89 | ||
| P/B | 2.09 | ||
| P/tB | 12.08 | ||
| EV/EBITDA | 15.15 |
EPS(TTM)1.49
EY4.89%
EPS(NY)1.82
Fwd EY5.97%
FCF(TTM)1.27
FCFY4.15%
OCF(TTM)1.8
OCFY5.92%
SpS21.68
BVpS14.61
TBVpS2.52
PEG (NY)6.71
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 | 4 |
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%