Hormel Foods Corp

HRL

Meat Packing Plants

Mkt Cap

$18.98B

PE

23.91

Debt

$4.265B

Cash

$963.2M

EV

$22.28B

FCF

$967.8M

Market Cap

$18.98B

P/E Ratio

23.91

Debt

$4.265B

Cash

$963.2M

EV

$22.28B

FCF

$967.8M

Charts data: {"Earnings":[{"time":"2014-10-25","value":602677000},{"time":"2015-10-24","value":686088000},{"time":"2016-10-29","value":890052000},{"time":"2017-10-28","value":846735000},{"time":"2018-10-27","value":1012140000},{"time":"2019-10-26","value":978806000},{"time":"2020-10-24","value":908082000},{"time":"2021-10-30","value":908839000},{"time":"2022-10-29","value":999987000},{"time":"2023-10-28","value":792920000}],"Sales":[{"time":"2014-10-25","value":9316256000},{"time":"2015-10-24","value":9263863000},{"time":"2016-10-29","value":9523224000},{"time":"2017-10-28","value":9167519000},{"time":"2018-10-27","value":9545700000},{"time":"2019-10-26","value":9497317000},{"time":"2020-10-24","value":9608462000},{"time":"2021-10-30","value":11386189000},{"time":"2022-10-29","value":12458806000},{"time":"2023-10-28","value":12110010000}],"Net Margins":[{"time":"2014-10-25","value":0.06469090158106433},{"time":"2015-10-24","value":0.07406068073329668},{"time":"2016-10-29","value":0.09346120599494456},{"time":"2017-10-28","value":0.09236250287564171},{"time":"2018-10-27","value":0.10603098777460009},{"time":"2019-10-26","value":0.1030613172120084},{"time":"2020-10-24","value":0.09450856963372493},{"time":"2021-10-30","value":0.07981941982519349},{"time":"2022-10-29","value":0.08026346987022673},{"time":"2023-10-28","value":0.06547641166274842}],"Assets":[{"time":"2014-10-25","value":5455619000},{"time":"2015-10-24","value":6139831000},{"time":"2016-10-29","value":6370067000},{"time":"2017-10-28","value":6975908000},{"time":"2018-10-27","value":8142292000},{"time":"2019-10-26","value":8109004000},{"time":"2020-10-24","value":9908282000},{"time":"2021-10-30","value":12696329000},{"time":"2022-10-29","value":13306919000},{"time":"2023-10-28","value":13448772000}],"Stockholders Equity":[{"time":"2014-10-25","value":3612056000},{"time":"2015-10-24","value":4001393000},{"time":"2016-10-29","value":4451406000},{"time":"2017-10-28","value":4939697000},{"time":"2018-10-27","value":5604818000},{"time":"2019-10-26","value":5925535000},{"time":"2020-10-24","value":6430326000},{"time":"2021-10-30","value":6978360000},{"time":"2022-10-29","value":7540219000},{"time":"2023-10-28","value":7738985000}],"ROE":[{"time":"2014-10-25","value":0.16685151060780895},{"time":"2015-10-24","value":0.1714622882581141},{"time":"2016-10-29","value":0.19994851065034283},{"time":"2017-10-28","value":0.17141436003058488},{"time":"2018-10-27","value":0.1805839190496462},{"time":"2019-10-26","value":0.1651844095090148},{"time":"2020-10-24","value":0.1412186567212922},{"time":"2021-10-30","value":0.13023676049960162},{"time":"2022-10-29","value":0.13262041858465914},{"time":"2023-10-28","value":0.10245788045848389}],"ROA":[{"time":"2014-10-25","value":0.17627788890683166},{"time":"2015-10-24","value":0.17383540361290076},{"time":"2016-10-29","value":0.20783062407349875},{"time":"2017-10-28","value":0.18355588978524373},{"time":"2018-10-27","value":0.14724613167889336},{"time":"2019-10-26","value":0.14918169975005563},{"time":"2020-10-24","value":0.11250658792311322},{"time":"2021-10-30","value":0.08870044246647987},{"time":"2022-10-29","value":0.09864094010040941},{"time":"2023-10-28","value":0.07971330021804221}]}

Hormel Foods Corporation develops, processes, and distributes various meat, nuts, and food products to retail, foodservice, deli, and commercial customers in the United States and internationally. The company operates through four segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other. It provides various perishable products that include fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamoles, and bacons; and shelf-stable products comprising canned luncheon meats, nut butters, snack nuts, chilies, shelf-stable microwaveable meals, hashes, stews, tortillas, salsas, tortilla chips, and others. The company also engages in the processing, marketing, and sale of branded and unbranded pork, beef, poultry, and turkey products, as well as offers nutritional food products and supplements, desserts and drink mixes, and industrial gelatin products. It sells its products primarily under the SKIPPY, SPAM, Hormel, Natural Choice, Applegate, Justin's, Jennie-O, Café H, Herdez, Black Label, Sadler's, Columbus, Gatherings, Herdez, Wholly, Columbus, Planters, NUT-rition, Planters Cheez Balls, Corn Nuts, etc. brand names through sales personnel, independent brokers, and distributors. The company was formerly known as Geo. A. Hormel & Company and changed its name to Hormel Foods Corporation in January 1995. Hormel Foods Corporation was founded in 1891 and is headquartered in Austin, Minnesota.

Sector

10-Q
7/30/23
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10-K
10/30/22
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10-K
10/27/19
10-Q
7/28/19
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4/28/19
10-Q
1/27/19
10-K
10/28/18
10-Q
7/29/18
10-Q
4/29/18
10-Q
1/28/18

DCF

Discounted Cash Flow Valuation of Hormel Foods Corp

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$967.8M	$971.6M	$975.4M	$979.2M	$983M	$986.9M	$990.7M	$994.6M	$998.5M	$1.002B	$1.006B	$10.06B
DCF		$844.9M	$737.5M	$643.9M	$562.1M	$490.7M	$428.3M	$373.9M	$326.4M	$284.9M	$248.7M	$2.487B
Value	$7.429B

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth 1.7%

Earnings Stability 18%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is too low to guarantee profitability in case of higher costs or higher interest rates. Furthermore lower margins cause higher earnings’ volatility.

Over time the ROA has been decreasing indicating a lower marginal ROA with respect to the calculated one, this could impede growth.

Years	10-2015	10-2016	10-2017	10-2018	10-2019	10-2020	10-2021	10-2022	10-2023	TTM
Net Margin	7.4%	9.3%	9.2%	11%	10%	9.5%	8%	8%	6.5%	6.5%
ROA	17%	21%	18%	15%	15%	11%	8.9%	9.9%	8%	7.9%
ROE	17%	20%	17%	18%	17%	14%	13%	13%	10%	10%

What is the average Net Margin?

The average Net Margin over the past 5 years is +8.82%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is -0.82%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +11.27%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is -1.47%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +14.21%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is -1.43%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

The company has high debt with respect to the cashflow it generates.

The Graham’s stability indicate reliability of earnings, and consideration about the future are more dependable.

Years	10-2015	10-2016	10-2017	10-2018	10-2019	10-2020	10-2021	10-2022	10-2023	TTM
Debt FCF	0.51	0.34	0.32	0.73	0.40	2.05	4.33	3.86	5.48	4.41
Debt Equity	0.11	0.06	0.05	0.11	0.04	0.24	0.48	0.44	0.55	0.54
MIN
Graham Stability	-	-	100%	100%	100%	96%	94%	100%	84%	84%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 4.41.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is 1.04.

What is the Graham’s Stability?

Graham’s Stability measure stands at 0.84.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has not been increasing in the past years.

Years	10-2016	10-2018	10-2020	10-2022	Trend
Revenue	3.5%	4.9%	8%	-2.8%	0.87%
Net Income	-1.6%	-4.8%	-4.4%	-21%	-3.6%
Stockholders Equity	8.2%	6.7%	6.4%	2.6%	-0.87%
FCF	0.76%	-1.8%	0.74%	-9.2%	-2.3%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +4.87%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is +0.87%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is -4.76%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is -3.57%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is +6.67%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is -0.87%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is -1.81%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is -2.33%.