Austin, Minnesota-based Hormel Foods Corporation (HRL) develops, processes, and distributes various meat, nuts, and other food products to foodservice, convenience store, and commercial customers. Valued at a market cap of $16.6 billion, the company sells its products under various brands, including Planters, Skippy, Spam, Hormel, Natural Choice, Applegate to name a few.
Shares of this food processing company have lagged behind the broader market over the past 52 weeks. HRL has declined 15.3% over this time frame, while the broader S&P 500 Index ($SPX) has gained 11.5%. Moreover, on a YTD basis, the stock is down 3.9%, compared to SPX’s marginal rise.
Narrowing the focus, HRL has also underperformed the First Trust Nasdaq Food & Beverage ETF’s (FTXG) 8.1% downtick over the past 52 weeks and 1.1% loss on a YTD basis.
On Feb. 27, HRL’s shares plunged 1.2% after its mixed Q1 earnings release. On the upside, the company’s revenue of $3 billion slightly improved from the year-ago quarter and came in 1.7% above the consensus estimates. However, due to a considerable decline in its retail and foodservice segments’ profit, its overall adjusted EPS fell 14.6% year-over-year to $0.35 and missed the forecasted figure by 5.4%.
Looking ahead to fiscal 2025, the company reaffirmed its organic net sales growth outlook of 1% to 3%, and maintained its adjusted EPS expectations of $1.58 to $1.72.
For the current fiscal year, ending in October, analysts expect HRL’s EPS to grow 1.9% year over year to $1.61. The company’s earnings surprise history is mixed. It topped the consensus estimates in two of the last four quarters, while missing on two other occasions.
Among the 9 analysts covering the stock, the consensus rating is a “Hold” which is based on two “Strong Buy,” six “Hold,” and one “Strong Sell” rating.
This configuration is slightly less bearish than two months ago, with one analyst suggesting a “Moderate Sell” rating.
On Apr. 15, BofA upgraded HRL’s rating to “Neutral,” with a price target of $35, which indicates a 16% potential upside from the current levels.
The mean price target of $32.28 represents a 7% premium from HRL’s current price levels, while the Street-high price target of $36 suggests an upside potential of 19.4%.
