Hormel Foods
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#HormelFoods Q4 FY2024 #EarningsReport Summary | $HRL (+1,02 %)
Hormel Foods faced challenges such as inflationary pressures, declines in turkey commodity markets, and production disruptions at a Virginia facility. However, strategic initiatives like the Transform and Modernize (T&M) program and innovative product launches offset these headwinds, enabling strong operational performance.
📊 Income Statement Highlights (vs Q4 FY2023):
▫️ Net Income: $220.20M vs $195.93M (+12.37%)
▫️ Total Revenue: $3.14B vs $3.20B (-1.88%)
▫️ Adjusted EPS: $0.42 (flat YoY)
▫️ Gross Profit: $521.23M vs $514.43M (+1.32%)
▫️ Operating Income: $294.48M vs $270.04M (+9.06%)
▫️ Adjusted Operating Margin: 9.8% (unchanged YoY)
Segment Performance:
▫️Retail: Volume down 5.5%; net sales down 3.8%. Adjusted profit up 28.88%. Growth in SPAM, Jennie-O, and Black Label brands offset declines in snacking and ready meals.
▫️Foodservice: Volume up 1.7%; net sales up 1.3%. Profit down 7.91% due to margin pressures in premium and poultry products.
▫️International: Volume down 9.5%; net sales up 1.4%. Segment profit surged 184.51%, driven by China recovery and export margins.
💼 Balance Sheet Highlights (vs FY2023):
▫️ Total Assets: $13.43B (flat YoY)
▫️ Total Liabilities: $5.03B (-3.90%)
▫️ Cash and Cash Equivalents: $741.88M (+0.73%)
▫️ Inventories: $1.58B (-6.20%)
▫️ Long-term Debt: $2.85B (+20.85%)
🔮 Future Outlook:
Hormel expects FY2025 net sales between $11.9B-$12.2B (+1%-3% organic growth). Projected operating income is $1.13B-$1.23B, with incremental T&M initiative benefits of $100M-$150M. Challenges include ongoing turkey market weakness and snack nut supply constraints in early quarters, with recovery expected mid-year.
Another bargain that nobody seems to be interested in (yet).
Let's see if that changes at the beginning of next year 😉
First of all, Hornel Foods is a food company. It produces and markets many branded foods.
With a market cap of 2 billion, there is still some room for upside, which makes the company more of a small to mid-cap.
In general, some sectors have not done very well this year. Healthcare and biotech were not too popular, nor were consumer staples like Hormel.
Hormel's growth has been quite slow, and margins cannot really be increased.
The chart also shows a terrible 1-year yield. This means that the company is now as cheap as it was in mid-2018.
And now it's getting exciting 🚀
Because I am betting on a turnaround, as the company is fundamentally healthy and the business model is stable.
Dividends have been paid for 96 years and increased for 57 years, which gives Hornel shares the title of dividend king!
More precisely, I am trying to exploit a "window dressing" effect. This means that active fund managers are throwing poorly performing shares (Hormel is one of them) out of their portfolios in order to improve their annual financial statements. According to the motto "What, we didn't have these loser stocks in our fund".
At the beginning of the next year, these very stocks often rise more strongly again.
If this increase does not yet take place in January, I am also prepared to hold the 3.5% dividend on Hormel shares for longer until they recover 🙂👏💸
𝗠𝗮𝗿𝗸𝗲𝘁 𝗡𝗲𝘄𝘀 🗞️
𝗕𝗶𝘁𝗰𝗼𝗶𝗻 𝗺𝗶𝗻𝗶𝗻𝗴 𝗺𝗶𝘁 𝗧𝗲𝘀𝗹𝗮? / 𝗪𝗼 𝗯𝗹𝗲𝗶𝗯𝘁 𝗱𝗲𝗿 𝗖𝘆𝗯𝗲𝗿𝘁𝗿𝘂𝗰𝗸? / 𝗗𝗮𝘅 𝗞𝗼𝗻𝘇𝗲𝗿𝗻𝗲 𝗸𝗮𝘂𝗳𝗲𝗻 𝗲𝗶𝗴𝗲𝗻𝗲 𝗔𝗸𝘁𝗶𝗲𝗻
𝗤𝘂𝗮𝗿𝘁𝗮𝗹𝘀𝘇𝗮𝗵𝗹𝗲𝗻 📈
Today, among others, JP Morgan Chase & Co ( $JPM (+0,31 %) ), BlackRock Inc ($BLK) and Wells Fargo & Company ($WFC (+0,44 %)) present their quarterly figures.
𝗘𝘅-𝗗𝗮𝘁𝗲𝘀 📅
As of today, among others, Graco Inc ($GGG (-0,88 %)), Alamo Group Inc ($ALG (-1,1 %)) and Hormel Foods corp ($HRL (+1,02 %)) are trading ex-dividend.
𝗠𝗮𝗿𝗸𝗲𝘁𝘀 🏛️
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The largest German Dax companies are currently buying back their own shares in record amounts. In total, it is about almost 17 billion euros. The sums of share buybacks in Germany were last this high shortly before the financial crisis. Only recently, Adidas ($ADS (-1,42 %)) , BASF ($BAS (-0,89 %)) and Linde ($LIN ) announced buyback programs in the mid-single-digit billions. Also the Dax newcomer Hello Fresh ($HFG (+1,19 %)) also wants to buy back shares worth 250 million euros.
𝗖𝗿𝘆𝗽𝘁𝗼 💎
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Expansion of the position. Since the purchase of the 1st position in 01/2017, it has almost only gone sideways. The long-term chart is nevertheless a dream, 10% p.a. in the last 20 years, 2.1% dividend yield (which is increased by 15% annually!) and the currently favorable valuation (Corona is having an impact here, plus rising meat prices) make me confident here.
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