Hormel Foods Faces Challenges Amid Market Volatility
Hormel Foods Corporation (HRL), valued at a market capitalization of $16.1 billion, is known for developing, processing, and distributing a range of food products, including meats, nuts, and snacks. Based in Austin, Minnesota, Hormel boasts well-established brands like SPAM, Skippy, Planters, Jennie-O, and Applegate, serving both retail and foodservice markets.
As a company with a market cap exceeding $10 billion, Hormel Foods categorizes itself as a “large-cap stock,” highlighting its significant presence and influence in the packaged foods industry. Its operations extend to over 80 countries, reflecting a robust international footprint. Hormel prioritizes sustainability through responsible sourcing methods and various environmental initiatives. Moreover, the company is actively investing in innovation, focusing on expanding its offerings in protein-based snacks, premium convenience foods, and plant-based products, aiming to align with changing consumer preferences.
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Stock Performance and Market Position
Despite its strong presence, Hormel Foods has experienced a decline in stock value, falling 21.8% since its 52-week peak of $36.86 on May 20, 2024. The company’s shares have also dropped 8.9% over the past three months, underperforming compared to the Dow Jones Industrial Average’s ($DOWI) modest 1.6% decrease during the same period.
In the past year, HRL’s stock has fallen 15.8%, contrasting sharply with the DOWI’s 8.3% gains. Year-to-date (YTD), HRL shares are down 8.2%, in stark comparison to the slight uptick recorded by the DOWI.
Adding to these challenges, HRL has been trading below its 200-day moving average since late May 2024, showcasing a bearish trend despite some price fluctuations. The stock has also remained below its 50-day moving average since early January, indicating ongoing struggles in its price performance.
Recent Earnings Report Highlights
HRL’s Q1 earnings results, published on February 27, demonstrated a mixed performance that resulted in a 1.2% drop in share price. The company reported net sales reaching $3 billion, surpassing analyst expectations by 1.7%. This growth was fueled by strong consumer demand for premium products, improved performance in China, and volume increases across key brands such as SPAM, Applegate, Hormel, Black Label, and Jennie-O.
However, adjusted earnings saw a year-over-year decline of 14.6%, landing at $0.35 per share and missing the consensus estimate of $0.37. Contributing factors to this downturn include reduced profitability in retail and foodservice sectors, weak sales volumes in all business units, and rising operational costs. Furthermore, Hormel has faced ongoing challenges from disruptions in snack nuts supply, impacting its overall performance.
When compared to its competitor, Conagra Brands, Inc. (CAG), Hormel has underperformed CAG’s 12.9% decline over the past year but has slightly outperformed its 8.7% fall YTD.
Analyst Outlook
Considering HRL’s recent struggles relative to the broader market, analysts express caution regarding the company’s outlook. The stock currently holds a consensus rating of “Hold” from nine analysts, with a projected mean price target of $31.43, indicating a 9.1% upside potential based on its present values.
On the date of publication, Neharika Jain did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data provided herein are solely for informational purposes. For more details, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.
