Investors with a great appetite for a pocketful of returns may consider this multinational manufacturer and marketer of consumer-branded food and meat products. Hormel Foods Corporation (HRL, Financial) is primarily engaged in the production of a variety of meat and food products (many of which are among the best known and trusted in the food industry), and the marketing of those products throughout the United States and internationally.
The company enjoys a strong reputation among consumers, retail grocers, foodservice and industrial customers for products highly regarded for quality, taste, nutrition, convenience and value.
Performance lately
With a market capitalization of $13.52 billion, the company nearly employs 20,500 employees and has an approximate income of $607 million. It has a beta of 0.58 and P/E ratio of about 23.
“Six consecutive years of attaining record earnings is due to our hard-working employees and their commitment to delivering trusted, high-quality products to our consumers,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer at Hormel Foods. “We are proud to share the success of our company with our team.”
Hormel Foods, a multinational marketer of consumer-branded food and meat products, continues to be among an elite group in the industry for retaining its profit sharing plan. On November 25, HRL announced its 49th consecutive dividend increase. For the past 5 years, it has managed to increase its revenues consistently.
It had a decent fourth-quarter result. Segment operating profit increased 9 percent. International and Other operating profit was up 3 percent; volume up 6 percent; dollar sales up 13 percent. Refrigerated Foods operating profit was up 10 percent; volume up 1 percent; dollar sales up 9 percent. The company reported fiscal 2014 fourth quarter net earnings of $171.3 million, up 9 percent from net earnings of $157.3 million a year earlier. Diluted earnings per share for the quarter were $0.63, up 9 percent compared to $0.58 last year. Sales for the quarter were $2.5 billion, up 9 percent from the same period in fiscal 2013.
For the year ended October 26, 2014, net earnings were a record $602.7 million, up 15 percent from net earnings of $526.2 million last year. Diluted net earnings per share were $2.23, up 14 percent from diluted net earnings per share of $1.95 last year. Sales for the year ended October 26, 2014, totaled a record $9.3 billion, up 6 percent from last year.
Expectations
Hormel Foods expects positive results from the Jennie-O Turkey Store, International and Other and Specialty Foods segments. Skippy peanut butter items and Hormel Rev snack wraps will also strengthen its position in the coming quarters. The impact of cost pressures will be there in Grocery Products and Refrigerated Foods segments. Additionally, the company expects its New Product Development as a percentage of total sales will be 30% (i.e. $3 billion) by 2016. To strengthen its position in the global market, Hormel has licensed other companies to make products on a royalty basis. It has increased its International & Other segment sales on a remarkable basis and expects more in the coming years.
It is expected that CAGR will be of 10.47% for the next five years.
To end
Hormel has gained a strong brand reputation among its consumers which will boost its position ahead. Acquisition of Skippy and CytoSport will also contribute strong returns in the coming years. Further, the company’s strength can be seen in multiple areas such as consistent positive results, strong legacy portfolio, core innovation, multicultural flavors, raw material diversification and innovation. I am therefore pretty bullish that this leading manufacturer and marketer will continue this trend and won’t let its valued investors down in the long run.
