Hormel
HRL
$23.88
-0.83%
Hormel Foods Corporation is a global branded food company that produces and markets a wide range of meat and food products, including perishable proteins like fresh pork, turkey, and refrigerated items, as well as shelf-stable products such as Spam, Planters, and Skippy. As a leading player in the packaged foods industry, Hormel holds number one or two market share positions in many of its key categories, leveraging a diversified portfolio across retail, foodservice, and international channels. The current investor narrative centers on a strategic pivot toward higher-margin value-added proteins, highlighted by the divestiture of its volatile whole-bird turkey business, and a recent earnings beat that signaled a potential turnaround after a period of underperformance. Additionally, the company is navigating input cost pressures from a historic cattle shortage, which presents both challenges and opportunities for meat processors.…
HRL
Hormel
$23.88
Related headlines
Investment Opinion: Should I buy HRL Today?
Based on the analysis, Hormel is rated a Hold. The consensus analyst rating is 'hold' with an average target of $26.875, implying 9.5% upside. The thesis is that the company is in a turnaround phase, but the risk-reward is balanced given margin pressures and a stretched payout ratio. Investors should wait for more evidence of margin recovery before initiating a position.
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HRL 12-Month Price Forecast
The AI assessment is neutral, reflecting a balanced risk-reward. The stock is not a clear buy or sell, but the recent earnings beat and strategic divestiture provide a positive catalyst. However, margin pressure and a high payout ratio limit upside. The stance would upgrade to bullish if gross margins exceed 19% and revenue growth accelerates above 4%, or downgrade to bearish if the dividend is cut or margins fall below 15%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Hormel's 12-month outlook, with a consensus price target around $27.25 and implied upside of +14.1% versus the current price.
Average Target
$27.25
0 analysts
Implied Upside
+14.1%
vs. current price
Analyst Count
—
covering this stock
Price Range
$25 - $30
Analyst target range
Hormel is covered by 8 analysts, with a consensus recommendation of 'hold' and a mean rating of 2.6 (where 1 is strong buy and 5 is sell). The average target price is $26.875, implying an upside of 9.5% from the current price of $24.54. The distribution is not provided, but the 'hold' consensus suggests a neutral stance. The target range spans from $25.00 (low) to $30.00 (high), with the high target implying a 22.3% upside, likely assuming successful margin expansion and growth acceleration, while the low target suggests limited downside, possibly reflecting concerns about input costs and competitive pressures. Recent ratings actions show a mix of neutral and equal-weight stances, with JP Morgan downgrading from Overweight to Neutral in April 2026, indicating a cautious sentiment among analysts.
Bulls vs Bears: HRL Investment Factors
Hormel is at a pivotal juncture: the Q2 earnings beat and strategic divestiture provide evidence of a turnaround, but persistent margin compression and a stretched payout ratio temper enthusiasm. The bull case rests on successful execution of the value-added protein strategy and margin recovery, while the bear case hinges on continued input cost inflation and sluggish growth. Currently, the evidence slightly favors the bulls given the recent earnings momentum and attractive forward valuation, but the key tension is whether management can restore gross margins to 20%+ levels. If margins expand, the stock could re-rate higher; if they don't, the stock may remain range-bound.
Bullish
- Earnings beat signals turnaround: Q2 2026 EPS of $0.29 beat expectations, driving a 24.3% stock surge in 3 months. Net income swung from a -$56M loss in Q4 2025 to +$157M, indicating the strategic pivot is gaining traction.
- Strategic divestiture reduces volatility: The sale of the whole-bird turkey business removes a volatile, low-margin segment, allowing focus on higher-margin value-added proteins. This should stabilize earnings and improve margins over time.
- Solid balance sheet and liquidity: Debt-to-equity is a conservative 0.36, and the current ratio of 2.47 indicates ample short-term liquidity. This financial strength supports the dividend and potential strategic investments.
- Attractive forward valuation: Forward PE of 15.74x is near the lower end of its historical range (18-35x), suggesting the market is pricing in an earnings recovery. If EPS reaches the analyst consensus of $1.68, the stock offers value.
Bearish
- Persistent margin pressure: Gross margin of 17.44% in Q2 2026 is below the 20%+ levels seen in prior years, reflecting input cost inflation from the cattle shortage. Operating margin of 7.3% is also compressed, limiting earnings growth.
- High payout ratio strains dividend: The dividend payout ratio of 132% indicates dividends are not fully covered by earnings, which could force a dividend cut or reduced growth if earnings don't recover. This is a red flag for income investors.
- Underperformance vs. market: HRL has underperformed the S&P 500 by 33.7% over the past year (-13.3% vs. +20.4%). This persistent underperformance reflects structural challenges and may continue if the turnaround stalls.
- Analyst caution and downgrades: Consensus rating is 'hold' with a mean score of 2.6, and JP Morgan downgraded to Neutral in April 2026. The average target of $26.875 implies only 9.5% upside, suggesting limited near-term appreciation.
HRL Technical Analysis
Hormel's stock has been in a broad downtrend over the past year, with a 1-year price change of -13.29%, significantly underperforming the S&P 500's +20.37% gain. The current price of $24.54 sits at 54.5% of the 52-week range (between $19.70 and $29.35), indicating the stock is closer to the lower half of its range, reflecting persistent bearish sentiment. However, the 3-month change of +24.32% suggests a strong recovery attempt from the lows, positioning the stock in a potential bottoming phase rather than a continued freefall.
Beta
0.33
0.33x market volatility
Max Drawdown
-33.5%
Largest decline past year
52-Week Range
$20-$29
Price range past year
Annual Return
-17.4%
Cumulative gain past year
| Period | HRL Return | S&P 500 |
|---|---|---|
| 1m | -5.3% | +2.5% |
| 3m | +12.4% | +2.7% |
| 6m | -4.4% | +11.1% |
| 1y | -17.4% | +20.5% |
| ytd | +2.1% | +12.3% |
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HRL Fundamental Analysis
Hormel's revenue trajectory shows modest growth, with the most recent quarter (Q2 2026, ending April 26) reporting revenue of $2.97 billion, a 2.55% year-over-year increase. This follows a pattern of low single-digit growth, with Q1 2026 revenue up 1.29% and Q3 2025 up 4.63%, indicating a stable but unexciting top-line expansion. The growth is driven primarily by the Retail segment ($1.85 billion) and Foodservice ($998 million), while International remains small at $181 million. The company's profitability has improved, with Q2 2026 net income of $157 million and a net margin of 5.30%, up from a loss in Q4 2025, but gross margin of 17.44% is below the 20%+ levels seen in prior years, reflecting ongoing cost pressures. Hormel's balance sheet is solid, with a debt-to-equity ratio of 0.36 and a current ratio of 2.47, indicating ample liquidity. Free cash flow for the trailing twelve months is $693 million, and the company generated $179 million in operating cash flow in Q2 2026, covering its capital expenditures of $82 million and dividend payments of $161 million, though the payout ratio of 132% suggests dividends are not fully covered by earnings.
Quarterly Revenue
$3.0B
2026-04
Revenue YoY Growth
+2.5%
YoY Comparison
Gross Margin
17.4%
Latest Quarter
Free Cash Flow
$692940000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is HRL Overvalued?
Given that Hormel is profitable, the PE ratio is the primary valuation metric. The trailing PE is 27.29x, while the forward PE is 15.74x, implying the market expects significant earnings growth, likely due to the recent turnaround and cost-saving initiatives. Compared to the industry average (from valuation data), Hormel's PE is at a premium, but the forward PE is more attractive, suggesting the market is pricing in a recovery. Historically, Hormel's PE has ranged from around 18x to 35x over the past few years, with the current trailing PE near the middle of that range, while the forward PE is near the lower end, indicating potential value if the earnings recovery materializes.
PE
27.3x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 19x~34x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
15.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks include a high dividend payout ratio of 132%, which means the company is paying out more than it earns, potentially straining cash flow if earnings don't recover. The debt-to-equity ratio of 0.36 is manageable, but interest expense of $19.8M in Q2 2026 consumes a portion of operating income. Free cash flow of $693M TTM covers capital expenditures and dividends, but the negative PEG ratio (-0.67) suggests earnings are expected to decline, which could pressure the stock. Revenue concentration in perishable foods (73% of sales) exposes the company to commodity price swings and supply chain disruptions.