HRL

Hormel Foods Corp

Consumer


Presented:01/16/2019
Price:$42.84
Cap:$22.90B
Current Price:$31.14
Cap:$17.08B

Presented

Date01/16/2019
Price$42.84
Market Cap$22.90B
Ent Value$22.62B
P/E Ratio22.91x
Book Value$10.49
Div Yield1.96%
Shares O/S534.60M
Ave Daily Vol3,413,138
Short Int11.46%

Current

Price$31.14
Market Cap$17.08B
Hormel Foods Corp. engages in the production of meat and food products. It operates business through the following segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International and Other. The Grocery Products segment consists primarily of the processing, marketing, and sale of shelf-stable food products sold in the retail market. The Refrigerated Foods segment involves in the processing, marketing, and sale of branded and unbranded pork, beef, and poultry products for retail, foodservice, deli, and commercial customers. The Jennie-O Turkey Store segment include processing, marketing, and sale of branded and unbranded turkey products for retail, foodservice, and fresh product customers. The International and Other segment comprises Hormel Foods International which manufactures, markets, and sells Company products internationally. The company was founded by George A. Hormel in 1891 and is headquartered in Austin, MN.

Publicly traded companies mentioned herein: Hormel Foods Corp (HRL), Sanderson Farms Inc (SAFM)

Highlights

At $43, Hormel Foods (HRL) shares trade at ~24x current and forward year Street earnings estimates (17x and 16x EBITDA, respectively). This makes little sense to the presenter, as just about every comp in the packaged foods/meats segment has de-rated to a mid-teens, at best, multiple to earnings and ~11x EBITDA. Additionally, African swine fever seems to be spreading through the Chinese hog market, and there could be substantial risk on the supply side. This has the potential to impact HRL’s margins in coming quarters.

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Idea Discussion

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