Hormel Foods (HRL) and The Competition Critical Analysis

Hormel Foods (NYSE:HRL) is one of 328 publicly-traded companies in the “Food Products” industry, but how does it compare to its peers? We will compare Hormel Foods to related companies based on the strength of its earnings, risk, profitability, institutional ownership, dividends, valuation and analyst recommendations.

Institutional and Insider Ownership

41.0% of Hormel Foods shares are held by institutional investors. Comparatively, 38.8% of shares of all “Food Products” companies are held by institutional investors. 0.6% of Hormel Foods shares are held by insiders. Comparatively, 18.4% of shares of all “Food Products” companies are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Volatility & Risk

Hormel Foods has a beta of 0.27, meaning that its share price is 73% less volatile than the S&P 500. Comparatively, Hormel Foods’ peers have a beta of -3.82, meaning that their average share price is 482% less volatile than the S&P 500.

Profitability

This table compares Hormel Foods and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hormel Foods	2.82%	9.91%	5.89%
Hormel Foods Competitors	-12.89%	-118.90%	-2.05%

Valuation & Earnings

This table compares Hormel Foods and its peers top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Hormel Foods	$12.11 billion	$478.20 million	34.70
Hormel Foods Competitors	$6.86 billion	$703.44 million	-2,425.94

Hormel Foods has higher revenue, but lower earnings than its peers. Hormel Foods is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Hormel Foods and its peers, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hormel Foods	1	6	1	0	2.00
Hormel Foods Competitors	2458	8309	8387	405	2.34

Hormel Foods presently has a consensus target price of $25.43, suggesting a potential upside of 16.32%. As a group, “Food Products” companies have a potential upside of 16.34%. Given Hormel Foods’ peers stronger consensus rating and higher probable upside, analysts plainly believe Hormel Foods has less favorable growth aspects than its peers.

Dividends

Hormel Foods pays an annual dividend of $1.17 per share and has a dividend yield of 5.4%. Hormel Foods pays out 185.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Food Products” companies pay a dividend yield of 12.4% and pay out 29.5% of their earnings in the form of a dividend. Hormel Foods has raised its dividend for 60 consecutive years. Hormel Foods lags its peers as a dividend stock, given its lower dividend yield and higher payout ratio.

Summary

Hormel Foods peers beat Hormel Foods on 8 of the 15 factors compared.

About Hormel Foods

Hormel Foods Corporation is a branded food company that produces and markets meat and other food products for retail, foodservice and other customers. Its offerings include pork, turkey and other meat products, as well as refrigerated and shelf-stable foods. The company’s brands include Hormel, SPAM, Jennie-O, Skippy, Applegate and Planters. Its products are sold in the United States and in international markets. Founded in 1891 by George A. Hormel in Austin, Minnesota, the company has grown from a local meatpacking business into a diversified food producer.