Valued at a market cap of $16.1 billion, Hormel Foods Corporation (HRL) develops, processes, and distributes various meat, nuts, and other food products to foodservice, convenience store, and commercial customers. The Austin, Minnesota-based company owns various well-known brands such as SPAM, Skippy, Planters, Jennie-O, and Applegate, catering to both retail and foodservice markets.
Companies worth $10 billion or more are typically classified as “large-cap stocks,” and Hormel Foods fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the packaged foods industry. The company has a strong international presence, selling its products in over 80 countries, while maintaining a commitment to sustainability through responsible sourcing and environmental initiatives. Additionally, it continues to invest in innovation, expanding its protein-based snacks, premium convenience foods, and plant-based offerings to meet evolving consumer preferences.
Despite its notable strength, this food processing company has slipped 21.8% from its 52-week high of $36.86, reached on May 20, 2024. Moreover, it has declined 8.9% over the past three months, lagging behind the broader Dow Jones Industrial Average’s ($DOWI) 1.6% downtick over the same time frame.
In the longer term, HRL has declined 15.8% over the past 52 weeks, falling behind DOWI’s 8.3% returns over the same time frame. Moreover, on a YTD basis, shares of HRL are down 8.2%, compared to DOWI’s slight uptick.
To confirm its bearish trend, HRL has been trading below its 200-day moving average since late May, 2024, despite some fluctuations. Additionally, it has remained below its 50-day moving average since early January, with some fluctuations recently.
HRL’s Q1 earnings results released on Feb. 27, presented a mixed performance, leading to a 1.2% drop in its share price. The company’s net sales saw slight growth, reaching $3 billion, which exceeded analyst expectations by 1.7%. This increase was driven by strong demand for its premium offerings, improved performance in China, and volume growth across key brands like SPAM, Applegate, Hormel, Black Label, and Jennie-O.
However, adjusted earnings fell 14.6% year-over-year to $0.35 per share, missing the $0.37 consensus estimate. The decline can be attributed to lower profitability in the retail and foodservice segments, weaker volumes across all three business units, and increased expenses. Additionally, as expected, the company continued to face pressure from the lingering snack nuts supply disruption, which further impacted its performance.
Hormel Foods has lagged behind its rival, Conagra Brands, Inc.’s (CAG) 12.9% decline over the past 52 weeks but has marginally outpaced CAG’s nearly 8.7% fall on a YTD basis.
Looking at HRL’s recent underperformance relative to the Dow, analysts remain cautious about its prospects. The stock has a consensus rating of “Hold” from the nine analysts covering it, and the mean price target of $31.43 suggests a 9.1% premium to its current levels.
