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 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 has a valuation in line with the averages, but it does not seem to be growing. 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
HRL had positive earnings in the past year.
In the past year HRL had a positive cash flow from operations.
Each year in the past 5 years HRL has been profitable.
Each year in the past 5 years HRL had a positive operating cash flow.
1.2 Ratios
HRL's Return On Assets of 5.57% is fine compared to the rest of the industry. HRL outperforms 71.91% of its industry peers.
HRL's Return On Equity of 9.31% is fine compared to the rest of the industry. HRL outperforms 65.17% of its industry peers.
Looking at the Return On Invested Capital, with a value of 6.44%, HRL is in the better half of the industry, outperforming 66.29% of the companies in the same industry.
HRL had an Average Return On Invested Capital over the past 3 years of 7.49%. This is significantly below the industry average of 29.14%.
| 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
Looking at the Profit Margin, with a value of 6.27%, HRL is in the better half of the industry, outperforming 76.40% of the companies in the same industry.
HRL's Profit Margin has declined in the last couple of years.
HRL has a better Operating Margin (8.38%) than 70.79% of its industry peers.
In the last couple of years the Operating Margin of HRL has declined.
The Gross Margin of HRL (16.54%) is comparable to the rest of the 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
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so HRL 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 3.84 indicates that HRL is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.84, HRL is in the better half of the industry, outperforming 77.53% 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 is in the better half of the industry, outperforming 79.78% of the companies in the same industry.
A Debt/Equity ratio of 0.35 indicates that HRL is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.35, HRL is in line with its industry, outperforming 55.06% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.35 | ||
| Debt/FCF | 4.11 | ||
| Altman-Z | 3.84 |
ROIC/WACC0.83
WACC7.79%
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 better Current ratio (2.47) than 75.28% 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.
HRL has a better Quick ratio (1.17) than 67.42% 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%.
The Earnings Per Share has been decreasing by -1.91% on average over the past years.
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
The Earnings Per Share is expected to grow by 5.76% 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 2.22% yearly.
EPS Next Y3.1%
EPS Next 2Y7.52%
EPS Next 3Y9.03%
EPS Next 5Y5.76%
Revenue Next Year1.46%
Revenue Next 2Y2.01%
Revenue Next 3Y2.28%
Revenue Next 5Y2.22%
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.
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
A Price/Earnings ratio of 19.07 indicates a rather expensive valuation of HRL.
61.80% of the companies in the same industry are more expensive than HRL, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of HRL to the average of the S&P500 Index (26.85), we can say HRL is valued slightly cheaper.
HRL is valuated correctly with a Price/Forward Earnings ratio of 15.55.
HRL's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. HRL is cheaper than 65.17% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of HRL to the average of the S&P500 Index (34.98), we can say HRL is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.07 | ||
| Fwd PE | 15.55 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as HRL.
Based on the Price/Free Cash Flow ratio, HRL is valued a bit cheaper than the industry average as 69.66% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.45 | ||
| EV/EBITDA | 14.05 |
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)6.15
PEG (5Y)N/A
EPS Next 2Y7.52%
EPS Next 3Y9.03%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 4.10%, HRL is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 4.56, HRL pays a better dividend. On top of this HRL pays more dividend than 83.15% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, HRL pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.1% |
5.2 History
On average, the dividend of HRL grows each year by 6.53%, which is quite nice.
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
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%
28.41
+0.13 (+0.46%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryFood Products
Earnings (Last)
Earnings (Next)
Inst Owners89.99%
Inst Owner Change0.52%
Ins Owners0.16%
Ins Owner Change0.03%
Market Cap15.62B
Analysts66.25
Price Target33.56 (18.13%)
Short Float %4.06%
Short Ratio3.65
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.1% |
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%
EPS NQ rev (3m)-2.77%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.02%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.07%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.02%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.07 | ||
| Fwd PE | 15.55 | ||
| P/S | 1.31 | ||
| P/FCF | 22.45 | ||
| P/OCF | 15.74 | ||
| P/B | 1.94 | ||
| P/tB | 11.26 | ||
| EV/EBITDA | 14.05 |
EPS(TTM)1.49
EY5.24%
EPS(NY)1.83
Fwd EY6.43%
FCF(TTM)1.27
FCFY4.45%
OCF(TTM)1.8
OCFY6.35%
SpS21.68
BVpS14.61
TBVpS2.52
PEG (NY)6.15
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 | 3.84 |
F-Score6
WACC7.79%
ROIC/WACC0.83
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 5Y5.76%
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 5Y2.22%
EBIT growth 1Y-1.14%
EBIT growth 3Y-1.84%
EBIT growth 5Y-2.55%
EBIT Next Year26.2%
EBIT Next 3Y13.93%
EBIT Next 5Y9.03%
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%