Hormel Foods Corporation HRL is savoring the fruits of a flourishing Foodservice sector. The company fixates on six strategic priorities to propel growth, augmenting its power in the culinary arena. A heavyweight in the food industry, Hormel Foods reinforces its stronghold through shrewd acquisitions. However, costs are not something the HRL juggernaut can shrug off effortlessly.
Venturing deeper into the delectable details.
The Feast of Foodservice
Hormel Foods’ enduring partnerships, diverse product range, inventive solutions, and stellar sales squad act as stimulants, propelling the Foodservice arm to greater heights. This trajectory persisted in the initial quarter of fiscal 2024, witnessing a 9.4% surge in net sales and an 8% uptick in volumes within the Foodservice segment. The growth is broad-based, with several categories contributing. The management anticipates continued volume expansion, led by turkey, bacon, and pepperoni, supported by escalating raw material input markets, all set to fortify net sales growth in the segment.
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Driving Force: Strategic Priorities
Hormel Foods advances steadfastly with its six cornerstone priorities, spanning a spectrum of avenues including enhancing focus and kindling growth in the Retail division, anchoring its position in Foodservice, embarking on robust global expansion, implementing the entertaining & snacking vision, accentuating the One Supply Chain initiative, and perpetuating the ongoing business transformation and modernization.
Embarked on transformation and modernization endeavors, the company centers on supply chain efficiency, portfolio optimization, and data analytics. In the planning work stream, management steers a new end-to-end planning process and integrates innovative planning technology. Progressing under the buy work stream, the enterprise reaps the rewards of new procurement and productivity programs. This strategic focus is pivotal to charted growth trajectories over the ensuing three years. Moreover, Hormel Foods’ One Supply Chain drive is aimed at trimming costs, cutting down complexity, while seeding investments for long-term prosperity.
Towards expansions, Hormel Foods secured a minority stake in Indonesia-based food and beverage giant PT Garudafood Putra Putri Jaya Tbk in the final quarter of fiscal 2022, paving the way for an expanded footprint in Indonesia and Southeast Asia. In a transformative June 7, 2021 move, the company absorbed the Planters snacking portfolio from The Kraft Heinz Company. The Planters brand sustained an upward trajectory in volume and dollar share during the initial quarter of fiscal 2024, witnessing favorable point-of-distribution metrics and household penetration surges.
Any Clouds on the Culinary Front for Hormel Foods?
Hormel Foods finds itself locking horns with the escalating impact of mounting selling, general, and administrative (SG&A) expenses. The initial quarter of fiscal 2024 witnessed an 8% upsurge in SG&A expenses, catapulted by added investments in transformation projects and augmented employee-related costs. The management braces for significant surges in advertising investments during the fiscal second quarter and fiscal 2024, bolstering various brands. Hormel Foods also confronts headwinds in the International segment, with segmental net sales witnessing a 3.3% dip in the fiscal first quarter, driven by sluggish branded export sales and subdued Chinese operations.
The aforesaid upsides are poised to sustain Hormel Foods’ growth narrative. The shares of this Zacks Rank #3 (Hold) stalwart have hurdled 5.2% year-to-date, exceeding the industry’s 3.7% growth trajectory.
Savory Picks in the Food Stocks Buffet
Post Holdings POST, a consumer packaged goods holding entity, flaunts a Zacks Rank #1 (Strong Buy). POST boasts a trailing four-quarter earnings surprise averaging 52.2%. Check out the complete list of Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year sales and earnings projects growth rates of 15.2% and 3.4%, respectively, over the previous year’s figures.
Vital Farms Inc. VITL offers an assortment of pasture-raised food items. Currently carrying a Zacks Rank #2 (Buy), VITL holds a trailing four-quarter average earnings surprise of 145%.
The Zacks Consensus Estimate for Vital Farms’ current fiscal-year sales forecasts a 29% upsurge from the corresponding actuals of the preceding year.
Utz Brands Inc. UTZ crafts a diverse range of salty snacks, presently boasting a Zacks Rank #2. UTZ maintains a trailing four-quarter earnings surprise averaging 2.6%.
The Zacks Consensus Estimate for Utz Brands’ current fiscal-year sales and earnings envisions growth rates of 0.9% and 19.3%, respectively, over the previous year’s numbers.
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Hormel Foods Corporation (HRL) : Free Stock Analysis Report
Post Holdings, Inc. (POST) : Free Stock Analysis Report
Vital Farms, Inc. (VITL) : Free Stock Analysis Report
Utz Brands, Inc. (UTZ) : Free Stock Analysis Report
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The author’s views and opinions expressed herein are personal and do not necessarily reflect those of Nasdaq, Inc.
