Hormel Foods Reports Decline Amid Market Performance Challenges

Austin, Minnesota-based Hormel Foods Corporation (HRL) processes and distributes a variety of meat, nuts, and food products to foodservice, convenience stores, and commercial customers. The company holds a market capitalization of $16.6 billion and markets its products under several brands, including Planters, Skippy, Spam, Hormel, and Applegate, among others.

Over the past 52 weeks, Hormel’s shares have notably underperformed when compared to the broader market. Specifically, HRL has decreased by 15.3% during this period, while the S&P 500 Index ($SPX) has seen a gain of 11.5%. Furthermore, on a year-to-date basis, HRL is down 3.9%, contrasting with a slight rise in the SPX.

Narrowing the focus, HRL’s performance has also fallen short against the First Trust Nasdaq Food & Beverage ETF (FTXG), which declined by 8.1% over the last year and recorded a 1.1% drop on a year-to-date basis.

Following the release of mixed Q1 earnings on February 27, HRL’s shares dropped by 1.2%. On a positive note, the company reported revenue of $3 billion, which was a slight improvement from the same period last year and exceeded consensus estimates by 1.7%. However, significant profit declines in both its retail and foodservice segments led to a 14.6% drop in adjusted EPS to $0.35, missing forecasts by 5.4%.

Looking ahead to fiscal 2025, Hormel reaffirmed its guidance for organic net sales growth to range from 1% to 3%, while maintaining its adjusted EPS expectations between $1.58 and $1.72.

For the fiscal year ending in October, analysts project HRL’s EPS will grow by 1.9% year over year to $1.61. The company’s earnings surprise history is inconsistent; it exceeded consensus estimates in two out of the last four quarters but fell short in the other two.

Of the nine analysts covering the stock, the consensus rating is a “Hold,” reflecting two “Strong Buy,” six “Hold,” and one “Strong Sell” rating. This outlook is slightly more favorable than two months ago, where one analyst recommended a “Moderate Sell.”

On April 15, BofA upgraded HRL to a “Neutral” rating with a price target of $35, indicating a potential upside of 16% from current levels. The average price target of $32.28 suggests a premium of 7% from HRL’s current price, while the highest target of $36 implies an upside potential of 19.4%.

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 are solely for informational purposes. For more details, please review the Barchart Disclosure Policy here.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.