Hormel Foods Corp (HRL) stock analysis

P/E above its 5-year median

Hormel Foods's P/E of 34.8 is above its own 5-year median of 23.5.

P/E above the industry

Hormel Foods's P/E of 34.8 is above the Food and Kindred Products median of 21.0.

EV/EBITDA above its 5-year median

Hormel Foods's EV/EBITDA of 16.7 is above its 5-year median of 15.8.

P/B below the industry

Hormel Foods's price-to-book of 1.54 is below the Food and Kindred Products median of 2.12.

Trading above fair value

The share price of $21.95 is above our fair value estimate of $18.27.

Margin of safety under 20%

The price is 20.2% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew -1.0% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -21.8% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -54.6% over the last twelve months, against a 5-year average of -12.0% a year.

Growing faster than the industry

Revenue grew 0.7% over the last twelve months; the Food and Kindred Products median is 0.6%.

Guidance lowered

Hormel Foods lowered its fiscal 2026 net sales outlook on Aug 26, 2026.

Gross margin slipping

Gross margin was 15.7% over the last twelve months, against 16.3% a year earlier.

Return on equity under 15%

Return on equity was 4.3% over the last twelve months and averaged 10.8% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 3.7%, below the 10% that usually covers the cost of capital.

Return on equity below the industry

Hormel Foods's return on equity of 4.3% is below the Food and Kindred Products median of 6.2%.

Earnings shrank over 5 years

Net income shrank 12.0% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 2.8% over the last twelve months, against a 5-year average of 6.7%.

Net margin above the industry

Hormel Foods's net margin of 2.8% is above the Food and Kindred Products median of 2.3%.

Low debt

Debt is 36.4% of shareholders' equity, under the 40% we consider low.

Debt rising against equity

Debt to equity rose from 20.3% five years ago to 36.4%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 38.2% of total debt.

Interest well covered

Operating income covers interest expense 7.3 times.

Short-term assets cover short-term debts

Current assets are 1.88 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 3.32; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Hormel Foods paid dividends worth 5.3% of the share price over the last twelve months.

Yield above Treasuries

The 5.3% yield is above the 4.4% on a 1-year Treasury.

Yield in the top quarter

The top quarter of US dividend payers yield 3.8% or more; Hormel Foods yields 5.3%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Not covered by earnings

Dividends take 187% of net income, leaving little room.

Covered by free cash flow

Dividends take 82.1% of free cash flow.