QUOTE AND NEWS
SeekingAlpha  Sep 29  Comment 
By Sure Dividend: In Part 8 of the 54 Part Dividend Aristocrats In Focus series, we will look into meat and consumer food business Hormel (NYSE:HRL). Hormel is the maker of various food products that are sold under recognizable brands like Skippy,...
SeekingAlpha  Sep 25  Comment 
By Balanced Investing: Hormel Foods Corporation (NYSE:HRL) is engaged in the processing of food products for retail, foodservice and fresh product customers. The company reports its operations under five sections: Grocery products, Refrigerated...
SeekingAlpha  Sep 24  Comment 
By Amal Singh: Hormel Foods (NYSE:HRL) posted record numbers for the third quarter on the back of strong demand for pork and turkey. In addition, strong sales of value-added products in its refrigerated foods, Jennie-O Turkey Store, and...
Benzinga  Sep 24  Comment 
Below are the meat products stocks on the NYSE and the NASDAQ in terms of revenue. The trailing-twelve-month revenue at Tyson Foods (NYSE: TSN) is $36.37 billion. Tyson's PEG ratio is 0.70. The trailing-twelve-month revenue at BRF SA (NYSE:...
Forbes  Sep 23  Comment 
Campbell Soup Company (CPB) declared a regular quarterly dividend on its capital stock of $0.312 per share. The quarterly dividend is payable Nov. 3, 2014, to shareholders of record at the close of business Oct. 13, 2014.
Market Intelligence Center  Sep 19  Comment 
Hormel Foods Corp (HRL) traded between $50.50 and $51.05 before closing at $50.97 Thursday and presents some attractive trading opportunities today. MarketIntelligenceCenter.com’s patented algorithms selected a Dec. '14 $50.00 covered call for a...
Benzinga  Sep 5  Comment 
Recently, CNBC reported on a motorcycle made by Hormel Foods Corp (NYSE: HRL) that runs entirely on refined bacon grease. CNBC reporter Jane Wells bent down beneath a mounted biker as he revved up the engine and she smelt deep into the...
newratings.com  Sep 5  Comment 
WASHINGTON (dpa-AFX) - Hormel Foods Corp.'s (HRL) chairman, president and chief executive officer, Jeffrey Ettinger, highlighted strategy for Targeted Growth at the annual Barclays Back-to-School Consumer Conference in Boston, Mass. In...
Market Intelligence Center  Aug 28  Comment 
The patented algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center found a trading opportunity with Hormel Foods Corp (HRL) that should provide a 2.02% return in just 51 days. Sell one Oct. '14 call at the $50.00...
SeekingAlpha  Aug 26  Comment 
By The Value Investor: Investors in Hormel Foods (NYSE:HRL) were pleased with the company's third quarter results which the company released last week. Stronger than anticipated sales and earnings triggered enthusiasm among investors. The company...




 

The company's financial results and margins are tied closely to the cost and supply of pork, poultry, and feedstuff commodities prices like grain, which are the principal costs in raising livestock; corn prices in particular have risen since 2007 as ethanol producers have increased demand for the grain. The company generally enters into long-term hedging arrangements with suppliers, but major fluctuations in price or supply disruptions can adversely impact results. In the longer term, consumption in increasingly wealthy countries such as China may be particularly attractive to Hormel given its strong portfolio of branded meat products.

Company Overview

Business Financials

In 2009, HRL earned a total of $6.53 billion in total revenues. This was a decline from its 2008 total revenues of $6.75 billion. Despite this decrease in total revenues, HRL's net income increased. Between 2008 and 2009, HRL's net income increased from $286 million in 2008 to $343 million in 2009.[1]

Key Trends, Risks and Forces

Supply and price of inputs (live pork and poultry)

Hormel is heavily dependent upon favorable pricing and availability of live hogs and poultry in making its foods, as well as the commodity inputs that are required to feed the animals (Grains Prices, corn, etc). Major increases in price or major shocks to or shifts in supply could increase costs and deteriorate margins. Hormel believes its long-term hedging contracts to “lock in” current prices, as well as its ability to partially pass on costs to consumers through price increases, are sufficient to mitigate risk. However, the “spot” hog market (i.e. buying hogs without a long-term contract) is steadily on the decline, and it is possible that underutilized slaughterhouses lead to increases in Hormel’s raw materials. Also, grain prices have been rising and can be volatile, further increasing the volatility and potential contraction of margins.

Ability to brand and market value-added meat products

About 80% of packaged meat products are branded, as the companies that sell them attempt to differentiate their product and leverage pricing power by staying "top of mind" in the grocery store (also see Private Label Trends). Hormel's brands are vitally important to the company's margins and ability to sell larger volumes than its undifferentiated competitors. The quality of the company's products and strength of the Hormel name vis-a-vis similarly successful meat brands (e.g., Tyson Foods (TSN)) is a key determinant of success going further. Furthermore, the ability of Hormel to develop the same brand strength in increasingly wealthy international markets like China, will be crucial in determining success going forward. As a result, HRL does not need to rely upon private labels to sell its volume of goods- it is able to sell its products as branded items, thereby ensuring relatively comfortable margins.

Growth abroad

While the company's domestic market (U.S.) are fairly mature, other markets, including China, represent attractive prospects for more organic growth. The company particularly notes that its Chinese operations have been reporting strong top and bottom line growth, and management recognizes China as a key area for Hormel's growth. As China becomes more economically mature and consumers begin to value Hormel’s brands, the company can benefit from strong growth in this rapidly expanding market and is pursuing initiatives to grow its business there. Whether HRL successfully competes against China's domestic brands as well as international competitors remains to be seen.

Disease outbreaks

The company is subject to the possibility of animal disease outbreaks that might threaten sales, hamper margins, or lead to reputational damage if humans were ever to become infected. Furthermore, government intervention or restrictions following an outbreak could lead to adverse results.

Competition

Hormel competes largely with similarly positioned large providers of packaged meat products that one might typically find on any grocery store shelf. These include Tyson Foods (TSN), Smithfield Foods (SFD), Pilgrim's Pride (PGPDQ), and Sanderson Farms (SAFM).

Footnotes

  1. HRL 10-K 2009 Item 6 Pg. 12
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