HRL
Hormel Foods Corporation$25.07
Sell
Target $18.87
Report: Mar 07, 2026Consumer Defensive • Packaged Foods • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$25.07-24.7%
Rec: SellConviction: Low
Entry Target
N/A
N/A
Fair Value
$18.87
(25% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$32.07
52 Week Low$21.03
Avg. 3 Month Volume4.69M
Efficiency
LTM Gross Margin15.5%
LTM EBITDA Margin8.8%
LTM EBIT Margin6.2%
LTM Operating Margin6.9%
LTM ROA3.7%
LTM ROE6.1%
LTM ROIC9.9%
LTM ROCE6.3%
Capital Structure
Market Cap (MM)$12.5B
Enterprise Value (MM)$14.5B
Shares Outstanding550.48M
Total Debt (MM)$2.86B
Cash & Equivalents (MM)$867.91M
LTM Net Debt (MM)$1.99B
LTM Net Debt/EBITDA1.9x
Growth
TTM Rev. Growth1.9%
Last 3-Yr Rev. CAGR-0.7%
Last 3-Yr EBITDA CAGR-12.4%
Last 3-Yr EPS CAGR-20.9%
Valuation
Street Target Price$27.20
LTM EV/Revenue1.2x
LTM EV/Gross Profit7.7x
LTM EV/EBIT19.1x
LTM EV/EBITDA13.5x
LTM P/E25.5x
LTM EV/FCF25.0x
LTM P/FCF21.6x
LTM P/TB1.8x
LTM P/B1.6x
Dividend Yield5.1%
Payout Ratio130.7%
Executive SummarySituation: Current price is $25.07 versus fair value $18.87 (-24.7% expected return), and valuation confidence is stable. Debate: Bull case depends on Q3 FY2026 retail volume stabilization >90% validates pricing elasticity amid private-label exits. Bear case centers on Commodity inflation (pork trim +12% YoY) erodes pricing power, compressing margins to 5.5% and FCF. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
59-year Dividend King status with $633M record payouts supports 4.6% net yield; Foodservice high-single-digit growth via branded proteins; T&M savings $100-150M enable margin stabilization at 7.0%.
Bear Case
Commodity inflation compresses operating income 33% YoY to $758.4M; gross margins 15.5% trail peers by 13.6 points; negative incremental ROIC -150.7% signals reinvestment failure.
Key Catalysts
Mid-Term (6-18 months)Impact: Moderate
Q3 FY2026 retail volume stabilization >90% validates pricing elasticity amid private-label exits. Addresses market concern on demand weaknes...
Mid-Term (6-18 months)Impact: High
Hormel generates stable FCF of $577.6M (4.8% margin) amid 1.9% revenue growth to $12,144.7M, but structural margin compression from pork/bee...
Long-Term (18+ months)Impact: Moderate
Recent interim leadership and $50M turkey divestiture close sharpen portfolio; Q1 FY2026 organic +2% underscores relevance amid 6.6% short i...
Primary Risks
Concern: High
Commodity inflation (pork trim +12% YoY) erodes pricing power, compressing margins to 5.5% and FCF.
Concern: Medium
0.5% growth, 5.5% margins on moat erosion; 12x terminal yields $11.11 floor.
Concern: Medium
Stewardship adequate: strong incentives (LTIP 15-35% ROIC/organic sales) and 83% independent board (experts like Zechmeister ex-CFO C.H. Rob...
Recent Activity
2025-10-29SEC Filing (8-K)
-9.13%Hormel Foods appoints Paul Kuehneman as interim CFO and provides Q4 FY2025 business update
2025-08-28SEC Filing (8-K)
-13.09%Hormel Foods reports Q3 FY2025 results with strong top-line growth but earnings below expectations.
2024-09-04SEC Filing (8-K)
-6.43%Hormel Foods reports Q3 FY2024 results with better-than-expected earnings and narrows full-year guidance.
2024-05-30SEC Filing (8-K)
-9.71%Hormel Foods reports Q2 FY2024 results with better-than-expected earnings and updates full-year guidance.
2024-02-29SEC Filing (8-K)
+14.56%Hormel Foods reports Q1 FY2024 results with volume growth and reaffirms guidance
Valuation Table
9.8/10Decision Grade
Scenario Range
$11
Bear
$19
Base
$24
Bull
$25