Hormel Foods (HRL) Stock Analysis

Hormel Foods (HRL) Intrinsic Value – Margin of Safety Analysis            

(update March 2025)

Normalized Diluted Earnings Per Share (TTM): $1.38
Free Cash Flow Per Share (TTM): $1.62
Cash Flow From Operations (CFO) Per Share (TTM): $2.13

Estimated Intrinsic Value: $30

Target Buy Price Based on Required Margin of Safety =  $22
(Required Margin of Safety Based On Risk Stability Grade:

A = 0%, B = 20%, C = 40%, D = 60%, F = 80%)

Target SELL Price Based on Estimated Intrinsic Value = $35
(Allow Overvaluation Adjusted by Risk Stability Grade:

A = 40%, B = 25%, C = 15%, D = 5%, F = 0%)

Risk / Stability Grade: C

A grade indicates a quality company with a strong balance sheet, high earnings quality, and a positive business environment. These stocks require the slimmest margin of safety within the stock universe.

B grade indicates a company with a good balance sheet, good earning quality, and a stable business environment. The margin of safety required should be greater than stocks with an A grade but less than the average stock.

C grade indicates a company with a sufficient balance sheet, at least average earnings quality, and a reasonably stable business environment. The margin of safety required is greater than A & B stocks, but less than D & F stocks.

D grade indicates a company in good standing but has issues that could affect its stability and long term risks. D rated stocks should require a large margin of safety when purchased.

F grade indicates a company with significant issues that are currently affecting its stability and long term risks. Require an extremely large margin of safety for F rated stocks when purchased.

Financial Risk Grade: B

A grade indicates an extremely low probability of a dividend cut. This rating is reserved for companies with strong balance sheets and/or excellent dividend histories.

B grade indicates a very low probability for a dividend cut.

C grade indicates a low probability for a dividend cut and/or average safety risk.

D grade indicates there are issues that should be considered concerning future dividend payments.

F grade indicates serious dividend safety risks. Investors should complete comprehensive due diligence before investing.

Business Quality Grade: C

A grade indicates earnings quality is high or far above average.

B grade indicates earnings quality is good and/or above average.

C grade indicates earnings quality is acceptable or average.

D grade indicates earnings quality is poor and requires thoughtful due diligence.

F grade indicates the quality of the earnings is poor or far below average requiring serious due diligence.

Earnings Report: 1/31/25

Company Description

Sector: Consumer Defensive
Industry: Packaged Foods

Company Overview:
Hormel Foods Corporation (HRL) is a global branded food company known for producing and marketing a wide range of meat and packaged food products. Founded in 1891 and headquartered in Austin, Minnesota, Hormel owns well-known brands such as Spam, Skippy, Jennie-O, Planters, Hormel, Applegate, Columbus Craft Meats, Wholly Guacamole, Chi-Chi’s, and Dinty Moore. The company operates across retail, foodservice, and international markets, supplying protein-based and convenience food products to consumers worldwide.

Company Strengths:
Hormel benefits from a strong portfolio of recognized brands, a history of steady dividend growth, and a diversified product line that spans multiple food categories. It has a history of steady dividend growth and a diversified product line that spans multiple food categories. Its ability to innovate, such as expanding into plant-based and healthier food options, has helped sustain demand. The company also has a solid supply chain and distribution network, giving it a competitive edge in both retail and foodservice segments.

Company Challenges:
Hormel faces challenges from fluctuating input costs, particularly in protein markets, as well as ongoing labor and supply chain pressures. Competition from private labels and alternative protein sources also presents a threat to market share. Additionally, the company has been navigating shifts in consumer preferences, requiring continuous innovation to maintain relevance in a rapidly evolving food industry.

Disclaimer:
While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.