Stock (Symbol) |
Hormel (HRL) |
Stock Price |
$76 |
Sector |
| Food & Necessities |
Data is as of |
| December 4, 2015 |
Expected to Report |
| Feb 17 – Feb 22 |
Company Description |
 Hormel Foods is primarily engaged in the production of a variety of meat and food products and the marketing of those products throughout the United States and internationally. The Company markets its products through Hormel Foods International Corporation, a wholly owned subsidiary. The Company operates in five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store (JOTS), Specialty Foods, and International & Other. The meat products are sold fresh, frozen, cured, smoked, cooked, and canned. Perishable meat includes fresh meats, refrigerated meal solutions, sausages, hams, wieners, and bacon. The Poultry composed primarily of JOTS products. Shelf-stable includes canned luncheon meats, shelf-stable microwaveable meals, stews, chilies, hash, meat spreads, flour and corn tortillas, salsas, tortilla chips, peanut butter, and other items that do not require refrigeration. The Other category primarily consists of nutritional food products and supplements. Source: Thomson Financial |
Sharek’s Take |
 Hormel (HRL) is red-hot right now. Last qtr sales fell 6% as the company had issues with the strong dollar and had to battle the avian flu outbreak which in the end cost it 20% of its Turkeys. But the company cut jobs earlier this year, and this helped cost of sales, which declined 10% for the qtr. Also, pork prices are low and that’s helping profits in the Refrigerated and Grocery divisions. In the end profits grew 17% last qtr, outstanding for a mature multinational. Investors are gobbling up shares of HRL, and now the stock is extended after a 50% gain in a year. At 26x earnings these shares are rich, but annual profit estimates keep rising so the momentum could continue. Analysts just upped the estimated long-term profit growth rate of the company from 11% to 18%, and the yield is 1.5% as the company has increased its dividend 48 consecutive years. Hormel gets a top rating of safety from Value Line and is a great selection for the Conservative Growth Portfolio, but the stock is high right now, so if you invest, try to average in. |
One Year Chart |
 Solid profit growth this year, as the company has been beating analysts earnings estimates each qtr. HRL was expected to have 8% profit growth last qtr, then beat the street by 6 cents, and had 17% growth instead. The Estimates for the next 2 qtrs look light as comparisons from last year are tough, but if HRL beats by 6 cents next qtr it could have 12% growth. |
Fair Value |
 I just took my Fair Value P/E from 20 to 23 yet the stock is still higher than that even as sales growth is flat. Amazing management. My Fair Value on HRL for 2016 is $67, which is around 10% lower than the $76 it sold for when these charts were prepared. |
Bottom Line |
 Hormel Foods has paid a dividend for 87 straight years and has upped it 48 consecutive years. It earns a top rating of 1 for safety from Value Line and has a Beta of less than 1, which means its less volatile than the stock market. Still, this ten-year chart looks dangerous as HRL appears to be making a climax top.
Hormel is red-hot right now but the P/E is high right now and the charts look dangerous. Still, the trend is your friend in the stock market and right now the trend is up — with both the charts and profit estimates. HRL ranks 10th in the Conservative Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 10 of 32 |
